ABG Shipyard sails into some rough water

The Stock exchange had sought a clarification from ABG Shipyard today morning, regarding a news article which said that the L&T was in a race to buy ABG Shipyard stake. The company was prompt to issue a clarification stating that no such negotiations were taking place and that the company was not aware of any such information which had to be announced to the exchanges which could explain the aforesaid movement in the trading and that which is required to be disclosed to the stock exchanges as per Clause 36 of the Listing Agreement.

Well, thanks to the clarification, the stock price has tanked 7% to Rs.238 levels, with an intra day high at Rs.236.80.

Though the company has denied this stake sale to L&T, there is no doubt that given the evolving business model of the shipyard business in India, with more focus on defence. And being fully qualified to build all kinds of ships of defence, in a TV interview few days ago, the company had said that it was open to strategic investors in this business though it had yet to chalk about the exact way in this these strategic investors would come in. Thus the company might have denied this L&T stake sale now but in the next few days or months, we could hear a similar news issued by the company itself.