From Authum Investment & Infrastructure and Marathon Nextgen Realty to HBL Engineering and Apollo Micro Systems, the list reads like a who’s who of India’s emerging alpha generators. In several cases, FII ownership has surged even after massive price appreciation — a rare “price-up, ownership-up” phenomenon that often separates sustained structural stories from speculative froth.
For instance, Authum Investment’s foreign holding jumped from 7.94% to 14.11% in a single quarter, even as the stock clocked a 1,239% return over three years. Similarly, Marathon Nextgen Realty saw FII stakes surge nearly fivefold, while HBL Engineering and Apollo Micro Systems have each delivered over 700–1,100% gains, riding on India’s capex cycle, defence spending, and electrification boom.
This aggressive accumulation highlights the foreign desk’s growing appetite for smallcap risk at a time when benchmark indices hover near all-time highs and the broader market is struggling for breadth. FIIs appear to be cherry-picking scalable, capital-efficient franchises that can compound earnings.
Marathon Nextgen Realty’s FII holding nearly septupled from 0.94% to 6.89%, with the stock posting a 175% three-year gain. Shyam Metalics delivered over 200% returns alongside rising FII participation, with foreign ownership jumping from 0.44% to 3.65%.Fiem Industries saw FII stakes rise from 4.68% to 7.19% as the stock returned 157% over three years. HBL Engineering witnessed FII holdings climb from 4.83% to 7.10% while delivering a stunning 722% return.The multibagger roster extends across diverse sectors. Amber Enterprises saw FII ownership increase from 28.59% to 30.61% with 293% three-year returns. Power Mech Projects delivered 182% gains as FII stakes rose from 5.07% to 7.01%. Apollo Micro Systems witnessed FII holding jump from 7.16% to 8.94% while delivering an eye-popping 1,162% three-year return.
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Among the more dramatic movers, RIR Power Electronics surged 1,083% with FII stake rising from 8.62% to 9.52%. V2 Retail delivered a phenomenal 1,977% return as FII holding increased from 1.90% to 2.10%. Meghna Infracon Infrastructure posted 1,936% gains with FII stake moving from 7.26% to 7.84%.
Healthcare and specialty sectors also featured prominently. Healthcare Global Enterprises saw FII stakes jump from 2.16% to 3.59% with 158% returns. Kingfa Science & Technology witnessed FII holding rise from 6.34% to 7.78% alongside 326% gains. Deep Industries delivered 210% returns with FII participation increasing from 1.50% to 2.08%.
The engineering and capital goods space has been a clear FII favorite. Gabriel India saw foreign ownership rise from 5.97% to 6.50% as the stock delivered 714% returns. Shakti Pumps posted 898% gains with FII stakes climbing from 5.06% to 5.60%. Pennar Industries witnessed FII holding increase from 6.23% to 6.74% with 344% returns.
Even in traditionally defensive sectors, standout performers emerged. Banco Products delivered 696% returns with FII stake rising from 3.83% to 4.40%. Aditya Vision posted 229% gains as FII holding increased from 17.67% to 18.76%. Avantel surged 723% with FII participation moving from 0.48% to 0.66%.
But There’s a Catch
The broader market has been underperforming with Nifty up over 5% in the last one month while BSE Smallcap index has rallied less than 3%.
Pradeep Gupta, Executive Director-Head of Investments India at Lighthouse Canton, notes that large caps tend to lead any turnaround while broader market momentum comes with a lag, adding that “pain in small caps has been far more pronounced” with nearly two-thirds of small caps delivering negative returns in the last year.
Gupta flags that smaller names continue to be susceptible to macroeconomic distortions, margin pressures, profit booking and weak earnings prospects, with valuations trading at about 24 times FY2026 earnings. He emphasizes that Q2 earnings for smaller companies will be closely monitored to establish whether a turnaround is underway.
The Path Ahead
Despite near-term headwinds, market veterans see selective opportunities emerging.
Gupta believes “a sizable part of earnings derating is behind us,” noting that small and mid-cap earnings are expected to grow much faster than large caps in ongoing Q2 results. He suggests that despite underperformance, pockets of opportunity exist at reasonable valuations. Given measures around demand inducement, lower susceptibility to interest rates in the current environment, and an improving macroeconomic scenario, he sees prospects improving, albeit with caution.
Palak Shah, Director-Institutional Sales at PL Capital, emphasizes that midcaps and smallcaps will need “a very stock specific approach,” with stocks not performing as baskets but rather individually. He notes that “action will be stock specific and focus will be more on ability of managements to create scale at quick pace,” adding that large caps are proven names and improving macros always lead to re-rating in large cap names.
Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, attributes recent underperformance to profit-booking and the sharp rise in new IPOs that have drawn liquidity away from already-listed counters. However, she maintains that “fundamentally, this segment is showing strong value after the recent correction.” She expects that once ongoing global trade negotiations conclude and market sentiment stabilizes, small and mid-caps will outperform broader indices in coming months.
Jain remains positive from a medium-term perspective, stating that “with valuations now more reasonable and earnings visibility improving, this segment is well placed to deliver strong returns.” She sees selective mid and small-cap names attracting renewed investor interest as the economy enters a recovery phase and liquidity improves.
FII activity merits close scrutiny as their knowledge networks and research muscle often provide early signals of structural growth stories. The data reveals sustained institutional buying despite sharp price appreciation—suggesting conviction rather than momentum chasing.
The intersection of rising institutional interest and strong price performance in select smallcaps suggests sophisticated money is betting on specific India growth themes—infrastructure buildout, manufacturing scale-up, specialty chemicals, and domestic consumption plays.
If you’re tracking smallcaps, the question is: how many of these FII-backed multibaggers are in your portfolio? With markets increasingly rewarding earnings growth and capital efficiency, the intersection of FII interest and strong price performance may offer a potent screen to identify tomorrow’s winners.
(Data: Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)