Microcap stocks defy market: 50 stocks rise over 200% amid selloff; analysts caution over poor earnings, bubble risk
Leading the list is RRP Semiconductor, a Maharashtra-based firm whose shares skyrocketed from Rs 50.6 to Rs 2,833, translating into a 5,500% jump in under 11 months, according to an ET report. The company's market capitalisation rose from Rs 68.9 crore to Rs 3,858.5 crore, despite posting only Rs 32 crore in revenue and Rs 8.5 crore in net profit for FY25.
Penny frenzy amid broader correction
The meteoric rise in these counters comes at a time when broader indices have seen a correction.
Since September 27, 2024, the Nifty Smallcap 250 and Nifty Midcap 150 indices are down 3% and 1.8%, respectively, while the Nifty Microcap 250 has fallen 4.8%.
Among other top gainers are Elitecon International, Sumeet Industries, Vega Jewellers, Midwest Gold, Kothari Industrial Corporation, Arunis Abode, and Rajasthan Tube Manufacturing, with returns ranging from 1,000% to 4,800%.
Top Performing Microcap & Penny Stocks Since Sept 27, 2024
(Figures in Rs crore)
Company
CMP (Rs)
Current MCap (Rs cr)
% Chg since Sept 27, '24
FY25 Revenue (Rs cr)
FY25 PAT (Rs cr)
RRP Semiconductor
2,833.0
3,858
5,500.9%
32.0
8.5
Elitecon International
144.7
23,130
4,723.0%
551.4
69.6
Sumeet Industries
125.5
66
2,977.0%
1,195.0
170.3
Vega Jewellers
145.2
138
2,868.3%
10.6
0.2
Midwest Gold
1,264.3
413
1,699.4%
1.1
-5.6
Kothari Industrial Corporation
418.2
3,920
1,443.7%
87.6
-16.2
Arunis Abode
464.2
139
1,229.9%
0.5
-0.2
Rajasthan Tube Mfg Co
42.5
192
1,059.1%
56.4
0.5
Stellant Securities (India)
367.9
27
757.0%
1.9
1.3
IMEC Services
149.6
28
719.5%
28.8
25.4
Source: ET report
However, ET reported that 12 of the 50 stocks had reported net losses in FY25, and 19 had revenues below Rs 10 crore—raising concerns over fundamental weakness despite massive market cap expansion.
by Taboola
by Taboola
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Undo
'Mini-bubble' fears as
Sebi caution
still looms
Experts are warning retail investors to tread cautiously. 'One could say that it is a mini-bubble in a group of penny stocks, and one should be extremely careful not to get trapped with their core investment corpus in such stocks,' said Vikas Gupta, CEO, OmniScience Capital.
He noted that many traders are lured in by rumours of asset monetisation or future business potential, often unsupported by operational strength.
'Sebi had cautioned investors last year about price manipulation in SME and microcap counters, and those risks haven't gone away,' said Apurva Sheth, Head of Research, Samco Securities.
Sheth added that only 8 of the 50 stocks had a PE ratio between 0–50 and market cap-to-sales ratio below five—basic screens to assess a stock's fundamental viability. 'Most of the stocks from SME or microcap space have low corporate governance standards and no institutional ownership, thus investors would be better off staying away from them,' he said.
Gupta echoed the caution 'Yes, there can be exceptions, but are you expert enough to understand the exceptions? If not, stay away from such stocks.'
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