Microcap stock hits 5% upper circuit after signing MoU with Middle East firm for defence order

Synopsis:- A micro-cap engineered products stock hit a 5% upper circuit after signing a strategic Middle East MoU for an upcoming defence order. Shares traded near ₹794 with a ₹468 crore market cap, while revenue rose 2% year-on-year amid margin pressure and ongoing capacity expansion plans.

The shares of the engineered product manufacturer hit 5 percent upper circuit in today’s trading session after the company entered into a strategic Memorandum of Understanding with a Middle East-based company.

With a market capitalisation of Rs 467.96 crore, the shares of Sunita Tools Ltd were trading at Rs 794.00 per share, increasing around 4 percent as compared to the previous closing price of Rs 765.90 apiece

Memorandum of Understanding

The shares of Sunita Tools Limited have seen bullish movement after entering into a Strategic MOU with a Middle East-based company to support the execution of formalities and paperwork of an upcoming defence order for M107.

M107 refer to different military systems, most commonly two. One is the M107 Long Range Sniper Rifle, a .50-calibre, semi-automatic anti-materiel rifle. The other is the M107 projectile, a widely used 155-mm high-explosive artillery shell fired from howitzers.

Furthermore, the MoU enables Sunita Tools to leverage a local Middle East Partner for government liaison, regulatory approval, documentation, payment coordination, and on-ground execution support. This structure lowers compliance and execution risk in a sensitive transaction, while a percentage-based commercial sharing ensures aligned incentives, timely delivery, and a stronger foothold across Middle East and North African defence markets.

Additionally, this collaboration aligns with the company’s long-term strategy of expanding its international defence and aerospace business through trusted local partnerships and market-specific expertise.

Financial & other Highlights

The company delivered a largely stable top line, with revenue zooming marginally by 2 percent from Rs 15.33 crore in Sept 2024 to Rs 15.70 crore in Sept 2025. However, profitability came under pressure as net profit decreased by 16 percent from Rs 3.41 crore to Rs 2.88 crore, indicating higher costs or margin pressure.

Over the past one year, Sunita Tools Limited has shown improving operating performance. Operating profit increased marginally from Rs 4.23 crore in Sept 2024 to Rs 4.33 crore in Sept 2025, reflecting better cost control. Operating margin is also slightly up from 27.59% to 27.58%, remaining largely stable and indicating resilient operational efficiency.

Recently, the company’s acquisition of a second factory building in Faridabad signals a clear scale-up in its defence manufacturing plans. The new facilities will support line 2 for artillery shell production, boosting capacity once operational. With a commercial production target for October 2026, the expansion strengthens the company’s position in the defence segment.

Sunita Tools Limited is an Indian engineering company engaged in manufacturing precision-engineered products, primarily for defence and aerospace applications. The company focuses on high-specification machining, compliance-driven manufacturing, and export-oriented solutions. With growing international exposure, Sunita Tools is steadily expanding its footprint across global defence markets. 

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