New Delhi (TIP)- The world’s best-performing stock has turned into a warning sign for investors chasing quick gains from the artificial intelligence boom. A little-known Indian company has delivered a stunning 55,000% rise in just under two years, raising serious questions about hype, regulation and investor risk, reported Bloomberg.
RRP Semiconductor Ltd, which was largely unknown even within India until recently, has become a social media sensation after its shares surged more than 55,000% in the 20 months leading up to December 17. Bloomberg reports that this makes it the biggest stock gainer globally among companies with a market value above $1 billion.
The scale of the rally looks even more striking when placed against the company’s fundamentals. Bloomberg notes that RRP Semiconductor reported negative revenue in its latest financial results, has just two full-time employees according to its annual report, and only a loose connection to the global semiconductor spending boom.
The company’s transformation began in early 2024. Bloomberg reports that RRP’s promoter, Rajendra Chodankar, shifted the company away from real estate and renamed it RRP Semiconductor.
Chodankar, whose earlier business interests included thermal imaging systems and drone camera equipment, took control of the listed company by repaying an Rs 80 million loan owed by G D Trading and Agencies Ltd in exchange for equity.
On April 23, the board approved issuing shares to Chodankar and others at Rs 12 each, around 40% below the market price at the time. This move gave Chodankar a 74.5% stake and reduced the original founders’ holding to less than 2%, according to Bloomberg.
Around the same time, Chodankar set up a private company, RRP Electronics Pvt Ltd, with plans to build an outsourced semiconductor assembly and testing unit in Maharashtra. While the listed firm does not own this private company, Bloomberg notes that both are controlled by Chodankar, which may have added to investor excitement.
Bloomberg points out that the rally was driven by a mix of online hype, a very small free float, and a surge in retail investor participation in India. About 98% of RRP Semiconductor’s shares are held by Chodankar and a small group of associates, leaving very little stock available for public trading.
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