ABG Shipyard Ltd., India's biggest shipbuilder outside state control, plans to raise $200 million in a share sale in the middle of the fiscal year to help fund a third shipyard and expand an existing facility in Gujarat state.
The company is in talks with arrangers, including ICICI Bank Ltd., to sell new stock, Rishi Agarwal, managing director of Mumbai-based ABG Shipyard, said in an interview yesterday. The company starts its new business year today.
We will do it at the right time,'' he said, declining to provide further details. We're aggressively pursuing growth.''
Indian shipbuilders, including ABG and Bharati Shipyard Ltd., are increasing capacity to benefit from demand for new vessels, spurred by rising oil and commodity prices, as they face back orders stretching until 2011. ABG Shipyard shares have lost 27 percent this year, compared with the benchmark Sensitive Index's 23 percent decline.
They will be able to raise the money if they sell shares at a discount,'' said R.K. Gupta, who manages the equivalent of $90 million as chief investment officer at Taurus Mutual Fund in New Delhi. His funds own more than 3,000 shares of the company according to Bloomberg data.
ABG Shipyard gained 0.3 percent to 722 rupees as of 10:06 a.m. on the Bombay Stock Exchange, after rising 4.9 percent yesterday.
Third Shipyard
The company's proposed third facility will be able to build vessels measuring 350 meters (1,150 feet) in length, compared with 250 meters at its existing facility in Dahej, Chief Financial Officer Dhananjay Datar said in an interview yesterday. The company hasn't decided on the location for the new yard.
ABG Shipyard plans to use part of the sale proceeds to expand its yard in Surat city, Gujarat state.
The company has a huge order book and about half of them are repeat orders from customers,'' said ULJK Securities Pvt. analyst Omkar Vartak, who rates the stock a buy.'' He expects the stock to reach 1,200 rupees in the next 12 months.
ABG Shipyard in December won more than 10 billion rupees ($250 million) of orders from existing customers, including Thailand's Precious Shipping Public Co., India's Essar Shipping & Logistics Ltd., Lamnalco Ltd. of Cyprus and Maridive & Oil Services S.A.E. of Egypt.
Smaller Ships
The company earns 40 percent from building dry bulk ships and about 20 percent from smaller, multi-purpose vessels. Offshore vessels, which include tugs and support ships, contribute 40 percent to total sales.
Contributions from offshore vessels will decline to 30 percent after four years as ABG Shipyard expands revenue from smaller container ships, Agarwal said.
We would like to do more in the smaller container ships and we want to get on to chemical tankers,'' Agrawal said.
The company is in talks with arrangers, including ICICI Bank Ltd., to sell new stock, Rishi Agarwal, managing director of Mumbai-based ABG Shipyard, said in an interview yesterday. The company starts its new business year today.
We will do it at the right time,'' he said, declining to provide further details. We're aggressively pursuing growth.''
Indian shipbuilders, including ABG and Bharati Shipyard Ltd., are increasing capacity to benefit from demand for new vessels, spurred by rising oil and commodity prices, as they face back orders stretching until 2011. ABG Shipyard shares have lost 27 percent this year, compared with the benchmark Sensitive Index's 23 percent decline.
They will be able to raise the money if they sell shares at a discount,'' said R.K. Gupta, who manages the equivalent of $90 million as chief investment officer at Taurus Mutual Fund in New Delhi. His funds own more than 3,000 shares of the company according to Bloomberg data.
ABG Shipyard gained 0.3 percent to 722 rupees as of 10:06 a.m. on the Bombay Stock Exchange, after rising 4.9 percent yesterday.
Third Shipyard
The company's proposed third facility will be able to build vessels measuring 350 meters (1,150 feet) in length, compared with 250 meters at its existing facility in Dahej, Chief Financial Officer Dhananjay Datar said in an interview yesterday. The company hasn't decided on the location for the new yard.
ABG Shipyard plans to use part of the sale proceeds to expand its yard in Surat city, Gujarat state.
The company has a huge order book and about half of them are repeat orders from customers,'' said ULJK Securities Pvt. analyst Omkar Vartak, who rates the stock a buy.'' He expects the stock to reach 1,200 rupees in the next 12 months.
ABG Shipyard in December won more than 10 billion rupees ($250 million) of orders from existing customers, including Thailand's Precious Shipping Public Co., India's Essar Shipping & Logistics Ltd., Lamnalco Ltd. of Cyprus and Maridive & Oil Services S.A.E. of Egypt.
Smaller Ships
The company earns 40 percent from building dry bulk ships and about 20 percent from smaller, multi-purpose vessels. Offshore vessels, which include tugs and support ships, contribute 40 percent to total sales.
Contributions from offshore vessels will decline to 30 percent after four years as ABG Shipyard expands revenue from smaller container ships, Agarwal said.
We would like to do more in the smaller container ships and we want to get on to chemical tankers,'' Agrawal said.