How this Indian AI stock gained 55,000% in 20 months
What's the story
RRP Semiconductor Ltd., a little-known Indian company, has become the world's best-performing stock with an astronomical surge of over 55,000% in just 20 months. The company's meteoric rise comes despite posting negative revenue in its latest financial results and having only two full-time employees. The massive gain is the highest globally among companies with a market cap exceeding $1 billion.
Market shift
RRP Semiconductor's connection to semiconductor spending boom
RRP Semiconductor's link to the semiconductor spending boom is tenuous at best. The company shifted from real estate in early 2024 and has since been on a limit-up spree, with 149 consecutive sessions. Despite exchange officials and the company itself warning investors, a combination of online hype, a small free float, and India's growing retail investor base have fueled this unprecedented rally.
Investigation underway
Regulatory scrutiny on RRP Semiconductor's share surge
The Securities and Exchange Board of India (SEBI) is looking into the sudden spike in RRP's shares for possible wrongdoing, a person familiar with the matter told Bloomberg. The $1.7 billion stock has been restricted by its exchange to trade only once a week and has fallen 6% from its November 7 peak. This comes as part of SEBI's efforts to protect retail investors from speculative excesses in the market.
Corporate shift
RRP Semiconductor's transformation and ownership changes
RRP's transformation began in early 2024 when Rajendra Chodankar, the founder of RRP Group, acquired G D Trading and Agencies Ltd. by paying off an ₹80 million loan owed to its founders for equity. The board approved selling him and others shares at ₹12 each, 40% below market price. This deal gave Chodankar a 74.5% stake while reducing the founders' stake to less than 2%. The company also agreed to change its name to RRP Semiconductor.
Financial woes
RRP Semiconductor's financial performance and market perception
RRP Semiconductor reported negative revenue of ₹68.2 million and a net loss of ₹71.5 million for the quarter ending September. The company's financial troubles stem from reversing sales booked in the three months ending December 2024 from a ₹4.4 billion order won in November by Telecrown Infratech Pvt. The order was canceled over "contractual disagreements," according to an exchange filing by the company, which also reversed ₹80 million revenue in March quarter.
Worrying future
The company is yet to commence chip manufacturing
In a November 3 exchange filing, the company said it has not begun any semiconductor manufacturing, has not applied under any government schemes, and denied having any celebrity links. The stock has jumped from ₹20 in April 2024 to over ₹11,000. As AI hype fades and regulators step in, the risk now rests with investors who rushed in and with Chodankar, who controls nearly all available shares.