Mutual Funds Invest ₹5,294 Crore in IPOs as Small-Cap Stocks Comes in Spotlight

India’s primary market is buzzing again, and mutual funds are making the most of it. According to a report by Ventura Securities, mutual fund houses invested ₹5,294 crore in various Initial Public Offerings (IPOs) during the June 2025 quarter. Most of this investment went into small-cap companies, highlighting a strong shift in strategy from secondary markets to promising, scalable businesses.

Strong Focus on Small-Cap IPOs

Of all the IPO investments made by mutual funds, the majority went to small-cap companies, with just one classified as a mid-cap. This indicates a growing interest in younger, smaller companies with potential for high long-term returns.

Some of the top small-cap IPOs that saw significant mutual fund participation include:

• Aegis Vopak Terminals– ₹495 crore
• Belrise Industries– ₹398 crore
• Oswal Pumps – ₹387 crore
• Ellenbarrie Industrial Gases– ₹357 crore
• Kalpataru– ₹241 crore
• Sambhv Steel Tubes– ₹55 crore

These numbers show mutual funds are now targeting growth-oriented sectors and emerging businesses, moving away from traditional large-cap bets.

IPO Market Rebounds After Slow Start in 2025

The IPO market had a slow start in 2025, mainly due to market volatility and corrections in the first five months of the year. But since March 2025, there's been a clear revival, led by companies from the SME and MSME sectors.

As of now, only 79 IPOs have been listed this year, compared to 131 IPOs in 2024, but the recent spike in launches shows renewed investor confidence. With this positive trend, more IPOs are expected in the coming months.

Mutual Fund Performance During the Quarter

The same Ventura report noted that around 90% of mutual fund schemes outperformed the Nifty 50 TRI, highlighting the index’s underperformance. However, only 41% outperformed their own category benchmarks, showing how competitive and selective the market has become for fund managers.

Read more: Lower TERs Ahead: How Jio BlackRock’s Tech-First Model Benefits Investors.

Conclusion

Mutual funds pouring over ₹5,000 crore into IPOs reflects their renewed faith in India’s primary market, especially in the small-cap space. This trend shows that mutual fund houses are moving away from playing safe with large cap stocks. Instead, they are now backing emerging companies with higher growth potential.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments in the securities market are subject to market risks. Read all the related documents carefully before investing.