UT Limited: In league with Caterpillar

BSE 526879, CMP Rs 133
Calcutta based small cap UT limited has been recently picked up as a preferred supplier by Caterpillar India. This supply arrangement with a US based transnational corporation is likely to propel UT’s fortunes in the coming years. Investors would recall that Caterpillar is one of the most profitable and largest US engineering corporation that builds heavy machinery used in mining, excavation, power generation and road building.
In recent years, Caterpillar India has shown aggressive growth plans buying out the CK Birla owned Hindustan Powerplus, and delisting the same. It has rapidly moved into capturing a large market share in the diesel power generation segment, front loaders, bull dozers, dumpers, fork lifts, cranes and site controlled elevators.
A complementary fit
UT Ltd (formerly Usha Telehoist) is one of the pioneers in the field of Hydraulics. It manufactures hydraulic equipments, hydraulic pumps, tipping cylinders, hydraulic and wire operated passenger lifts, and airport equipment. These find application in agriculture, mining, construction and heavy industrial segments. UT operates out of three manufacturing locations Kolkata, Sahibabad and Hosur-all cities in close proximity to the heavy engineering consumption areas.
Financials are getting better
In the nine months to December 2005, UT reported Revenues of Rs 63 crore, with after tax profits of Rs 1.8 crore. UT is likely to report FY06 Revenues of slightly over Rs 100 crore, with after tax profits of Rs 3 crore. Thus for the concluded financial the EPS would be Rs 5.
For FY07, with the orders already under its belt, UT is likely to report Revenues of nearly Rs 150 crore, with after tax profits of Rs 6 crore. Thus FY07 earnings per share could be in the region of Rs 10. The scrip could thus inch upto the Rs 200 mark in a year’s time from now giving a smart 50 per cent return on investments.
Concenterated Ownership
Out of the Rs 6 crore Equity, Promoter's own 47.52 per cent, New India Assurance and LIC own 19.90 per cent and PCB's own 9.90, leaving a small public float of 18 per cent.