For most lay investors, this is uncharted territory. But for the market mavens at India’s mutual fund companies, this is hunting season.
Even as pessimism grips the broader market, these fund manag ers are seeing fertile ground for finding new investable opportunities as well as compelling entry points for high-conviction names. In this 13th edition of our special Most Wanted Stocks feature, we have zeroed in on a few stocks that have been consistently favoured by fund managers. The six stocks we have shortlisted have seen a gradual rise in mutual fund holdings for four consecutive quarters since September 2025. For a detailed look at how we zeroed in on these names, refer to the methodology on page 7.
Keep in mind that mimicking fund managers’ big moves comes with caveats. They often build positions gradually at lower valua tions and exit swiftly when market conditions or fundamentals change. Investors should do their own due diligence and invest only surplus money they won’t need for the next few years.
Fund managers’ favourite stocks
KFintech mainly serves the operational needs of as set managers with clients spanning mutual funds, alternative investment funds (AIFs), pension funds, and wealth managers. In its MF business, revenue growth has been slower amid a shift towards lower-yield liquid funds and a provision for an upcoming contract renewal. The management is keen on expanding the addressable market and diversifying revenue mix by reduc ing the contribution of domestic MF business to around 50% over the next three years.
The international business segment has seen several large deal wins as the company shifted its strategy from focusing on small boutique managers to large clients. With the integration of Singapore-based Ascent Funds Services (acquired recently), the management expects better yields and profitability led by new client wins and improving asset under management (AUM) growth in the Southeast Asian business.
The company has undertaken several cost optimisation measures which is expected to help deliver 40% Ebitda (earnings before interest, taxes, depreciation and amortization) margin for FY27. Structural tailwinds in the MF industry, coupled with increasing diversification into international, issuer solutions, alternates and pension busi nesses, are expected to drive KFin’s long-term growth.
Note:“Its technology-led, asset-light platform model, improving global fund administration capabilities position the company well to capitalise on opportunities across both Indian and global markets.”
MOTILAL OSWAL
FINANCIAL SERVICES
Top 5 funds holding KFin Technologies
Global expansion to power next growth phase
KFin Technologies vs BSE 500
Rainbow Children’s Medicare
Rainbow Children’s Medicare (Rainbow) is one of India’s largest multi-speciality pediatric and perinatal hospital chains, operating in a niche, underpenetrated segment. According to analysts, Rainbow’s evolution from a pediatric-focused hospital chain into a comprehensive mother-and-child healthcare platform enables patients to remain within the Rainbow ecosystem throughout different stages of the care journey. This integrated model not only strengthens patient acquisition, enhances patient retention, improves referral networks but also supports higher lifetime value per patient. These structural advantages have translated into industry leading margins, healthy returns on capital and a net cash balance sheet.
The management expects revenue to double over the next four years, with plans to double its capacity in the next five years. Rainbow’s leadership position in the pediatric market is further strengthened by its foray into high-growth non-core markets (North and West India), which should aid revenue trajectory. Expected occupancy improvement and investments in strengthening tech should further provide revenue visibility.
However, the initial drag from new projects may weigh on profitability in the near term. Analysts believe Rainbow’s differentiated business model is difficult to replicate, creating a sustainable competitive advantage.
Note:”Rainbow is well positioned to capitalise on the long-term growth opportunity in India’s under-penetrated pediatric and maternal healthcare market.”
IDBI CAPITAL
Top 5 funds holding Rainbow Children’s Medicare
Niche focus and strong growth prospects
Rainbow Children’s Medicare vs BSE 500
Indus Towers, India’s largest mobile tower infrastructure company, has strong order visibility for the next 3-4 quarters, driven by network expansion and migration of expiring tenancies from rival tower operators.
Relief on Vodafone Idea’s (VI) adjusted gross revenue (AGR) dues, allowing reduced and deferred payouts, has eased concerns over a key tenant’s continuity. It frees up VI’s cash flow for network upgrades and 5G rollout, giving Indus, its preferred network expansion partner, greater visibility on incremental tenancy additions.
However, delays in VI’s potential fundraise could slow additions, while uncertainty over Reliance Jio’s contract renewal remains a key overhang. Meanwhile, Indus’s Africa foray is progressing, with regulatory and operating licences secured in Nigeria, Uganda and Zambia. These underpenetrat ed markets offer long-term growth potential, supported by sub-50% smartphone penetration and high customer-per-tower ratios. Indus has secured orders from anchor customer Bharti Airtel, begun partner onboarding and placed key supply orders. Rollouts are expected to begin this quarter, with capex largely debt-funded. Analysts contend the selloff in Indus Towers’ shares on Jio contract renewal as well as Africa capital allocation is overdone.
Note:“Indus’s valuations are at a significant discount to global peers; its foray into Africa is likely to drive growth.”
EMKAY
Top 5 funds holding Indus Towers
Multiple growth levers in play
Indus Towers vs BSE 500
Timken India is engaged in the manufacturing, distribution and sale of anti-friction bearings, components, accessories and mechanical power transmission products. It is entering a multi-year growth phase supported by ongoing capacity additions at Bharuch and Jamshedpur. The Bharuch bearing facility is witnessing faster-than-expected production ramp-up while the Jamshedpur rail expansion project remains on track, with commercial production expected by 2026-end. These investments are expected to increase domestic manufacturing, enhance import substitution, improve product availability and support sustainable revenue growth across industrial, rail and export markets.
Revenues remain supported by resilient demand across industrial, mobile and export businesses. Timken continues to benefit from healthy demand in industrial processes, metals, renewable energy, off-highway equipment and heavy commercial vehicles, while exports are buoyed by the US market.
Disciplined pricing has helped maintain profitability despite rising steel prices. The ability to pass on higher input costs and preserve gross margins is expected to support sustainable earnings growth. Analysts expect Ebitda margin to expand from 18% in FY26 to 19-21% over FY27-28. With valuations easing amid strong execution, analysts believe the stock could see a re-rating.
Note:”Capacity expansion and localisation to drive the next phase of growth for Timken India.”
ICICI DIRECT
Top 5 funds holding Timken India
Capacity additions to help growth
Timken India vs BSE 500
SBI Cards & Payment Services
SBI Cards maintains a strong leadership position, with 18.6% market share in cards-in-force (total number of cards issued) and 19.5% market share in card spends. New card additions, which had moderated significantly in FY25-FY26 amidst asset quality woes, are seeing a pick-up. The company management expects receivables growth to accelerate in the second half of FY27, supported by higher new customer acquisitions and seasonal demand during the festive quarter.
The management continues to focus on its “spend to-lend” strategy, encouraging customers to convert card spends into EMI (equated monthly instalment) transactions either at the point of sale or post-purchase. SBI Cards has also strengthened partnerships with payment gateways and intermediaries to facilitate EMI conversions. These initiatives are expected to boost EMI penetration, customer engagement and growth in interest-earning assets.
Asset quality pain seems to be gradually resolving with declining credit costs and lower delinquencies. Loan loss provisions have dropped sharply. The asset mix has improved with Stage-2 and Stage-3 assets (classifications of expected credit loss) declining to low est levels since the Covid period, highlighting better portfolio quality. However, further repo rate hikes are likely to drive cost of funds higher, causing compression in NIMs.
Note:“We believe the moderated valuation multiples and easing asset quality challenges will support a re-rating.”
EMKAY
Top 5 funds holding SBI Cards and Payment Services
New customer additions boost recovery
SBI Cards and Payment Services vs BSE 500
Mahindra & Mahindra
Automotive and farm equipment manufacturing company M&M continues to see strong demand but is currently facing margin squeeze. It is seeing robust bookings momentum across its SUV (sports utility vehicle) portfolio. Resilient farm demand trends have alleviated concerns around the impact of a weaker-than-expected monsoon on consumption.
Expansion is on track, with monthly SUV production capacity set to reach 82,000 units by FY27-end, supporting both ICE (internal combustion engine) and EV (electric vehicle) growth. Labour shortages and rising adoption of higher-horsepower tractors and farm implements are expected to sustain growth in the pre mium tractor segment.
M&M prioritises profitable growth rather than sacrificing margins for EV market share. It is target ing long-term profit parity between ICE and EVs while simultaneously expanding market share across both powertrains. Management has indicated that EV operations are already EBITDA-positive even without PLI (production-linked incentives) benefits. The company has flagged potential headwinds from commodity cost inflation, particularly in the farm business, given its higher exposure to steel and rubber costs. However, margin pressures in the auto business are expected to ease going forward. With rural concerns already priced in, analysts see meaningful re-rating potential.
Note:“Current valuation fails to reflect Mahindra’s superior execution, resilient farm franchise, and strong upcoming auto launches.”
UBS
Top 5 funds holding Mahindra & Mahindra
Strong SUV, tractor demand fuels optimism
Mahindra & Mahindra vs BSE 500
Last year’s basket outperforms amid market rout
The 2025 portfolio of fund managers’ most favoured picks fared much better than the broader market. The basket declined 4% in value even as the BSE 500 index slumped 9.5%. The portfolio was held up by a strong uptick in Kirloskar Oil Engines, which nearly doubled in value. Most other stocks fell sharply.
Of the last eight editions of Most Wanted Stocks, four have beaten the index. Sharp outperformance was recorded in the 2018, 2019 and 2022 portfolios. The 2021 basket performed on par with the index. Three portfolios, from the years 2020, 2023 and 2024, have lagged sharply. A single stock from the 2020 basket caused the drag in the entire portfolio.
Mixed results: Four portfolios outperform, three lag index
Data as on 26 Oct; Compiled by ET Data team
All returns excluding year 2025 are annualised
Annualised return includes dividends. Final portfolio value excludes dividends
Sum invested in each stock not exactly equal to Rs.10,000 as the number of shares bought rounded off as per the purchase price. Total invested amount considers the sum invested in each stock.
METHODOLOGY
*We identified stocks from the BSE 500 index whose share in mutual fund holdings has consistently risen over the past four quarters.
*Only those stocks in which mutual fund holding was at least 10% of the company’s total share capital, and were held by at least 20 equity diversified schemes as of September 2026, were considered.
*These were further screened for a healthy return profile— boasting an average return on equity (RoE) of more than 15% over the past three years.
*We further weeded out stocks that are trading at very exorbitant valuations, undergoing negative developments or have adverse observations by analysts.