Small-cap stock below ₹50: Maruti Infra shares rise 6% despite weak market sentiment; here's why

Small-cap stock below ₹50: Shares of small-cap company Maruti Infrastructure Limited surged nearly 6 per cent on Thursday, December 12, defying weak market sentiment. The rally followed the company's announcement that it has received an Expression of Interest (EOI) for a strategic partnership and collaboration from Meinhardt Group, Asia's largest privately-owned global firm specialising 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 finalised 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, it said.

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 per cent during intraday trading to reach a high of ₹25. Despite this rally, the stock remains 37.5 per cent 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 per cent.

In 2024 so far, the smallcap stock has delivered over 14 per cent returns, while it is up 15 per cent over the past year. The stock has exhibited positive momentum in eight out of the last 12 months. It has risen 3.5 per cent in December so far, building on a 2 per cent gain in November. Earlier, the stock experienced a two-month losing streak, declining by 6.5 per cent in October and 26.5 per cent in September.

Q2 FY25 Financial Performance

The company faced challenges in the second quarter of FY25, reporting a net loss of ₹0.99 crore, as against a loss of ₹0.59 crore in the same period last year. However, net sales showed a marginal improvement, increasing 2.67 per cent year-on-year to ₹8.88 crore, compared to ₹8.65 crore in the September 2023 quarter.

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.

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