penny stocks: Small stocks, big surge: Over 50 microcaps soar up to 5,500% despite market turmoil

Mumbai: The sell-off in equities since late September last year disrupted the widespread bullish sentiment that had existed till then. Yet, that has not stopped some stocks from soaring into the stratosphere since. At least 50 little-known smallcap, microcap, and penny stocks have returned between 200% and an eye-popping 5,500% since September 27 when the stock market selloffs began, ignoring the sharp swings in sentiment between risk-on and risk-off in the period.

Out of these 50 top performers, 12 companies made losses at the end of FY25, while 19 have revenues of less than ₹10 crore, which is modest compared to their market value. The topper in the list is Maharashtra-based RRP Semiconductor, whose shares have shot up about 5,500% from ₹50.6 to ₹2,833. Its market capitalisation zoomed to ₹3,858.5 crore from ₹68.9 crore in September. The company posted a revenue of ₹32 crore and net profit of ₹8.5 crore in FY25.

Shares of other companies that saw outsized gains in this period are Elitecon International, Sumeet Industries, Vega Jewellers, Midwest Gold, Kothari Industrial Corporation, Arunis Abode Rajasthan Tube Manufacturing. These stocks jumped between 1,000% and 4,800%. The Midcap 150 and Smallcap 250 indices are down 1.8% and 3%, respectively, while the Microcap 250 index has shed 4.8% from September 27.

“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 at OmniScience Capital.

NACL Industries, Kothari Industrial Corporation, Midwest Gold, Gujarat Natural Resources, Naturite Agro Products, Relic Technologies, Jattashankar Industries, Lyons Corporate Market, Darjeeling Ropeway Company, Sparkle Gold Rock and Arunis Abode, which have seen their shares zoom up between 200% and 1,700% in the past 11 months, made losses in FY25. “Most people buy these stocks as there is expectation of large business sometime in future or unlocking of some “hidden” or underutilized asset, driving the prices upwards,” said Gupta. “Many traders buy on rumour in the hope of making money when the rumour is declared as an actual announcement.”

Out of the 50 shares that have moved up more than 200% since September, only 8 companies are the ones with a market cap to sales below five times and whose price to earnings (PE) ratio is between 0 and 50, which is a basic filter indicating some fundamental soundness, said Apurva Sheth, head of research at Samco Securities.The exuberance in the microcap and penny stock space is, however, much more moderate than it was before September.Then, Sebi cautioned investors against investing in the shares of unknown companies, highlighting instances where certain small and medium enterprises (SMEs) engaged in price manipulation by creating an unrealistic picture of their operations.

“Most of the stocks from SME or microcap space have lower corporate governance standards and don’t have institutional holding, thus investors would be better off staying away from them,” said Sheth. Gupta also advises investors to stay away from microcaps and penny stock space though there could be high-growth stories in their midst.

“Of course, there can be exceptions; but are you expert enough to understand the exceptions? If not, stay away from such stocks,” said Gupta.