5 Under-the-Radar Stocks Shared by India's Top Smallcap Funds
India's most prominent smallcap mutual fund managers are showing unexpected consensus, concentrating significant capital into a specific cohort of five stocks. As market volatility continues, these heavyweights are signaling high conviction in a select group of companies despite varying risk appetites.
The Power Trio: Managing ₹1.51 Lakh Crore
The convergence of investor interest is most visible among the three largest smallcap schemes in India: Nippon India Small Cap Fund (₹74,600 crore AUM), HDFC Small Cap Fund (₹38,800 crore AUM), and SBI Small Cap Fund (₹37,400 crore AUM). Together, these funds manage a massive ₹1.51 lakh crore of investor capital.
Data from ACE MF reveals that these three schemes have collectively parked approximately ₹8,000 crore—roughly 5.34% of their pooled assets—into just five specific stocks. While Nippon India maintains a modest 2.49% exposure to this group, SBI Small Cap shows the highest conviction, with nearly 10% of its entire portfolio dedicated to these five names.
Breaking Down the Top 5 Common Holdings
The shared bets across these mega-funds reveal a strategic tilt toward specific sectors. Here is how the capital is distributed among the five stocks:
- Krishna Institute of Medical Sciences (KIMS): The largest common bet by value, with combined holdings of ₹2,170 crore. SBI Small Cap leads this position with a 2.50% stake (₹935 crore).
- Kalpataru Projects International: Ranking second with a combined exposure of ₹2,100 crore. SBI Small Cap shows its strongest conviction here, holding 2.76% of its portfolio (₹1,030 crore).
- City Union Bank: The third most common holding, with a combined investment of ₹1,777 crore.
- PVR Inox: Rounds out the list with combined holdings worth ₹1,000 crore.
- Carborundum Universal: Holds the fifth spot with total combined holdings of ₹990 crore.
Market Context: Growth vs. Valuation
This concentration comes at a time when fund managers are turning more constructive on the small and midcap (SMID) space following recent corrections. George Heber Joseph, CIO at ASK Investment Managers, noted that mid-caps recently delivered 36% YoY profit growth, significantly outperforming large-caps at 10%.
However, the debate over valuation remains intense. While the Nifty Smallcap 100 has outperformed the Nifty 50 so far this calendar year, brokerages like JM Financial warn of premium valuations. Currently, the Nifty Midcap 100 trades at a P/E of 26.8x, while the Nifty Smallcap 100 stands at 24.5x, compared to just 18.8x for the Nifty 50. This suggests that while the "bottom-up" stock picking remains attractive due to earnings growth, the broader indices are trading well above their historical means.
Key Takeaways
- High Conviction Concentration: India's three largest smallcap funds have collectively invested ₹8,000 crore into just five stocks: KIMS, Kalpataru Projects, City Union Bank, PVR Inox, and Carborundum Universal.
- SBI Small Cap as the Aggressor: Among the top funds, SBI Small Cap shows the most aggressive positioning, with nearly 10% of its corpus concentrated in these five high-conviction names.
- Valuation Divergence: Despite strong earnings growth in the SMID space, analysts warn that small and midcap indices are trading at higher valuations compared to the relatively cheaper large-cap segment.