ABG Shipyard ends 13.3% higher on buzz L&T plans to buy stake in firm

NEW DELHI: Stocks of ABG Shipyard were on a roll on Tuesday after ET Now reported that Larsen & Toubro (L&T) is in talks to buy a stake in ABG Shipyard.

The stock rallied over 15 per cent in trade to hit its intraday high of Rs 260.

ET Now reported that bankers approached L&T with a proposal to pick up 30 per cent stake in the ABG Shipyard as an strategic investor.

Promoters of ABG Shipyard own 61.62 per cent stake in the company. A total of 95.54 per cent of their shares are encumbered.

Following the news and a sudden spike in ABG's shares, the Bombay Stock Exchange sought clarification from ABG Shipyard regarding the buzz.

G Chokkalingam, Founder, Equinomics Research & Advisory Pvt in an interview to ET Now said, "It would be too good for the bankers who will lend the money to the company rather than for the shareholders because I am negative on both shipbuilding and shipping companies."

The analyst pointed out that there is a huge oversupply of ships in the world and global analysts have predicted that the demand for ships would be terribly bad in the next two years.

L&T ended 0.56 per cent lower at Rs 1,752.85.