Indian AI Stock: Artificial Intelligence (AI) technology and its stocks are growing rapidly these days. However, you will be surprised to know that the world’s best performing AI stock this year belongs to an Indian company. The shares of this company have increased by more than 55,000 percent in the last 20 months. However, with such speed, concerns about a possible “AI bubble” have also started increasing.

This is the Indian company RRP Semiconductor Limited. Till some time ago, very few people knew about this company, but now it has become a topic of discussion on social media due to its tremendous returns. RRP has had the highest returns among companies in the world with a market cap of more than $1 billion. By December 17, its shares had risen more than 55,000 percent in the last 20 months.

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However, the reason behind this multibagger return is that the financial condition of the company is considered to be quite weak. The company’s revenue has been negative in recent results. According to the annual report, the company has only two full-time employees and its direct connection to the semiconductor or AI boom is also considered weak. The company left the real estate business in early 2024 and rebranded itself as a semiconductor company.

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Social media craze and limited shares

Experts say strong buzz on social media, very few free-float shares in the market and rapidly growing number of retail investors in India have driven the stock to extraordinary highs. The stock remained in upper circuit for 149 consecutive days. All this happened when the exchange officials and the company itself were warning investors about this rise.

Now signs of fatigue are beginning to appear in this rally. On November 7, the stock fell nearly 6 percent from its all-time high. Apart from this, SEBI has started investigating the possible irregularities behind this rise. The stock exchange has limited trading in RRP shares to only one day a week.

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Lack of AI companies in India, dilemma for investors

The RRP story is not believed to be directly linked to the global AI boom, but it highlights a bigger problem in India. There are very few listed companies in the AI ​​or semiconductor sector in the Indian stock market. For this reason, retail investors get attracted towards any stock whose name is to AI or chip sector.

Sonam Srivastava, founder of Wright Research and Capital, says, “The semiconductor sector is very hot at the moment. Due to less options in India, investors are ready to bet on almost every such name.”

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The story changed as the name changed

The current form of RRP came into existence in early 2024, when Rajendra Chodankar, founder of RRP Group, acquired GD Trading & Agencies Limited. In April 2024, shares were allotted to the promoter group at a price of Rs 12 per share, which was about 40 percent less than the then market price. After this the name of the company was changed to RRP Semiconductor Limited.

Earlier, Chodankar had established RRP Electronics Private Limited, which was involved in the plan to set up outsourced semiconductor assembly and testing units in Maharashtra. This connection further strengthened the story linking the listed company to the chip boom.

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Big names linked, but no direct relationship

In September 2024, some videos went viral on social media, in which Maharashtra Chief Minister Devendra Fadnavis and cricket legend Sachin Tendulkar were seen at an event at RRP Electronics’ unit in Navi Mumbai. However, the company later clarified that it does not have any commercial agreement with any celebrity and has not started any semiconductor manufacturing yet.

weak financial position

The financial figures of the company are a matter of concern for investors. RRP recorded negative revenue of Rs 68.2 crore and net loss of Rs 71.5 crore in the September quarter. This negative revenue was due to the cancellation of a large order worth Rs 440 crore, which was booked earlier but later had to be withdrawn due to contract dispute.

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Promoters hold almost entire stake

Another big concern is the shareholding pattern of the company. About 98 percent shares are held by promoter Rajendra Chodankar and people close to him. Due to limited availability of shares in the market, it becomes easy for abnormal fluctuations in prices.

Lessons for investors

The future may look bright for the AI ​​and semiconductor sector, but the case of RRP Semiconductor shows that not every stock with an AI tag is a safe investment. As regulatory scrutiny is intensifying and the AI ​​craze is cooling down, the risks in such stocks may increase further.

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