Small-cap stock below ₹50: Maruti Infra shares rise 6% despite weak market sentiment; here’s why | Stock Market News

Small-cap stock below ₹50: Shares of small-cap company Maruti Infrastructure Limited surged by nearly 6 percent on Thursday, December 12, 2024 despite wea market sentiment. The rally followed the company’s announcement that it had received an Expression of Interest (EOI) for a strategic partnership and collaboration from Meinhardt Group, Asia’s largest privately-owned global firm specializing in planning, design, engineering, project, and construction management.

The proposed collaboration between Maruti Infrastructure and Meinhardt Group is aimed at delivering innovative solutions across diverse sectors, including buildings, industrial and infrastructure projects, and sports and recreation developments.

Maruti Infrastructure clarified that the partnership is contingent upon the execution of a definitive agreement. The specific roles, responsibilities, and business volumes for both entities will be finalized and disclosed at a later stage. This partnership aligns with Maruti Infrastructure’s focus on expanding its capabilities in industrial and infrastructure projects, leveraging Meinhardt’s global expertise.

Company Overview

Maruti Infrastructure Limited, established in 1994 and headquartered in Ahmedabad, India, operates in the real estate and construction sectors. The company is involved in developing infrastructure and residential projects, as well as offering property management services for residential, commercial, industrial, and urban infra projects.

Stock Price Performance

Maruti Infrastructure’s stock climbed as much as 5.8 percent during intraday trading to reach a high of ₹25. Despite this rally, the stock remains 37.5 percent below its all-time high of ₹40.05, recorded in August 2024. The stock has, however, recovered significantly from its 52-week low of ₹16.89 in March 2024, posting a gain of 48 percent.

In 2024, the smallcap stock has delivered over 14 percent returns year-to-date, contributing to a 15 percent increase over the past year. The stock has exhibited positive momentum in 8 out of the last 12 months. It rose by 3.5 percent in December so far, building on a 2 percent gain in November. Earlier, the stock experienced a two-month losing streak, declining by 6.5 percent in October and 26.5 percent in September.

Q2 FY24 Financial Performance

The company faced challenges in the second quarter of FY24, reporting a net loss of ₹0.99 crore, a sharp decline of 267.13 percent compared to a net loss of ₹0.59 crore in the same period last year. However, net sales showed a marginal improvement, increasing by 2.67 percent year-on-year to ₹8.88 crore, compared to ₹8.65 crore in September 2023.

Stock Split and Bonus Issue

In August 2024, Maruti Infrastructure undertook its first-ever stock split and bonus issue. The stock split involved subdividing one equity share with a face value of ₹10 into five equity shares with a face value of ₹2 each. Additionally, the company announced a 1:2 bonus share issuance, offering one bonus share for every two shares held as of the record date, August 2, 2024.

These corporate actions aimed to improve stock liquidity and enhance shareholder value. As per the company’s filing on June 22, 2024, the stock split and bonus issuance were subject to shareholder approval, which was subsequently granted.

Maruti Infrastructure’s recent surge reflects investor optimism about its strategic collaboration with Meinhardt Group. However, its financial performance indicates challenges, necessitating cautious evaluation. While corporate actions like stock splits and bonus issues may attract investors, it is essential to consider the company’s earnings trajectory and long-term growth potential.

Disclaimer: This article is for educational purposes only. Investors are advised to consult financial advisors before making investment decisions.