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When mutual funds start accumulating a stock, especially in the small-cap space, it's not by accident.
Fund managers spend weeks, sometimes months, doing the kind of due diligence most retail investors simply don't have the time or resources for.
So when fresh shareholding data shows a fund quietly building a position in a small-cap name, it's worth paying attention.
Here we look at four such small-cap companies.
These stocks are filtered using Equitymaster’s stock screener: Smallcap Stocks Recently Bought by Mutual Funds in India.
In the most recent March 2026 quarter, mutual funds increased their stake by 7.5%, taking the overall shareholding to 17.24%.
This buying comes on top of three consecutive quarters of buying, where mutual funds had increased their holding from 8.44%.
Aavas Financiers operates in the affordable financing segment. It offers housing loans and MSME loans backed by property and loans against property (LAP) to segments in the middle and lower income salaried and self-employed borrowers in India's rural and semi-urban regions.
Unlike its peers, Aavas uses an in-house sourcing model (98.9% direct) rather than relying on agents. This ensures deeper customer relationships and better control.
Coming to its financials, Aavas Financiers has grown its sales and net profit at a CAGR of 21% and 18% over the past five years.
The company's five-year average RoE stands at 13%.
Its profitability has remained healthy over the years, and asset quality also remained comfortable. The company has been able to raise funds at competitive rates.
Going forward, the company plans to expand its presence in more niche areas, and capture to the needs of rising housing demand.
It has continuously expanded into new geographic regions. Recently, Aavas entered Tamil Nadu and has now branches across 14 states. With the cluster-based expansion approach, Andhra Pradesh and Telangana are the next expansion opportunities.
In the March 2026 quarter, mutual funds increased their stake in the company by 7.2%.
In fact, mutual funds have now consecutively bought shares for the past five consecutive quarters, taking their stake from 4.77% to 14.94%.
Mastek is an IT services company, providing enterprise digital and cloud transformation services to the government, healthcare, life science, retail, and financial services sectors.
The company’s service offerings include application development, Oracle suite and cloud migration, digital commerce, application support & maintenance, BI & analytics, assurance & testing and agile consulting.
Evosys, a Mastek company, is an Oracle platinum partner and a leading Oracle cloud implementation and consultancy company, serving more than 1,000 Oracle cloud customers across more than 30 countries.
MST Solutions is another offering, which works as an independent Salesforce consulting and system integration partner, focused on the Southwest US region.
Meanwhile, BizAnalytica is based in the US and offers end-to-end data, cloud and modernisation solutions to clients.
Coming to Mastek’s financials, the company’s sales and net profit have grown at a CAGR of 26% and 27%, respectively, over the past five years.
Its RoE and RoCE have averaged 22% and 27%, respectively, during the same period.
Going forward, the company’s growth prospects are expected to be supported by India’s trade deals with the UK and Europe, given Mastek’s significant presence in these markets, along with its healthy order book.
Moreover, the company is expected to look for acquisitions to drive inorganic growth.
In the most recent March 2026 quarter, mutual funds increased their stake by 4.86%, taking the overall shareholding to 13.4%.
Wakefit Innovations, incorporated in March 2016, is an Indian, Bengaluru-based D2C (direct-to-consumer) home and sleep solutions company.
It's best known for its high-quality and affordable range of mattresses, furniture, and home decor products.
Initially, the company became popular for its memory foam mattresses sold directly to customers online, eliminating middlemen and offering competitive prices.
Now, the company’s product basket includes pillows, beds, sofas, study tables, wardrobes, and other furniture items, catering to the evolving needs of modern Indian homes.
The core focus of the company is product innovation and has full-stack integrated operations with differentiated processes and technical capabilities.
Wakefit operates five manufacturing facilities, of which two are situated at Bengaluru, Karnataka, two at Hosur, Tamil Nadu and one at Sonipat, Haryana.
Its facilities are equipped with imported machinery and automation technologies, such as robotic arms and roller belts, which streamline the production process and reduce waste.
The company sells products today across 700 districts across 28 states and 6 Union territories. It has about 125 stores in 62 cities across states and Union territories.
It's the largest and fastest-growing D2C home and furnishing solutions destination, with an omnichannel sales presence and strategically located store network. The multi-faceted marketing approach adds to the brand image of the company.
Coming to its financials, its sales have grown at a CAGR of 45% over the past 5 years. Meanwhile, the company remains loss-making at the ground level.
The management expects to close FY26 with mid to high-teen revenue growth and continued operating Ebitda margin improvement.
Also planned is an owned-channel expansion, which is central to the company’s model. The store rollout is expected to accelerate next fiscal onwards.
In the most recent March 2026 quarter, mutual funds increased their stake by 3.57%, taking the overall shareholding to 12.2%.
This buying comes after two consecutive quarters of selling, where mutual funds had reduced their holding by a few basis points.
CE Info is a location intelligence platform offering proprietary digital Maps as a Service, Software as a Service (SaaS), and Platform as a Service (PaaS).
It primarily generates revenue through embedded automotive navigation (NCASE), enterprise digital transformation analytics, and IoT telematics hardware, positioning the company as the foundational geospatial data and API provider enabling smart mobility and fleet management across India.
Its proprietary intellectual property cannot be easily replicated due to a highly favourable domestic regulatory framework that structurally limits foreign competition while accelerating indigenous innovation.
Under India's geospatial laws, restrictions on foreign competitors and data localisation mandates prohibit foreign entities from conducting vehicle-based ground surveys, creating 360-degree street views, or acquiring and reselling granular geospatial data.
This is its key advantage, and the company has made the most of it, as is evident from its financial numbers.
Over the past five years, the company’s sales and net profit have grown at a CAGR of 26% and 45%, respectively.
Its RoE and RoCE have averaged 20% and 27%, respectively.
Going forward, the management's guidance remains highly optimistic, aiming to cross ₹10,000 crore in revenue in the next two years, underpinned by a strong order book of ₹15,000 crore that provides long-term visibility.
The company expects its core map-led business to maintain Ebitda margins of 47% to 54%, while its high-growth IoT-led segment has seen margins expand to 14% due to an improving software mix.
Mutual fund buying doesn't guarantee a stock will run, but it does tell you that someone with serious skin in the game has done the homework and decided it's worth owning.
In the small-cap space, that kind of conviction can matter more than it does elsewhere, simply because these companies don't get the same analyst coverage or media attention that large-caps do.
As always, use this as a starting point, not a final answer.
Always conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
Equitymaster is India's leading independent equity research platform, providing in-depth research and analysis on BSE- and NSE-listed companies since 1996. As a SEBI-registered Research Analyst [Registration No. INH000021128], Equitymaster covers the full spectrum of Indian equities — bluechip stocks, midcap stocks, smallcap stocks, and microcap stocks.
At the heart of Equitymaster's research philosophy are the principles of value investing — particularly the margin of safety and the primacy of investment over speculation. All research is produced by an independent team of SEBI-registered research analysts with vast experience in Indian financial markets, using detailed systems and processes developed entirely in-house.
With over 17 lakh readers across 72 countries, Equitymaster is one of India's leading equity research publications. Since 1996, the goal has remained the same — to deliver honest, unbiased, and credible equity research that helps Indian investors make better, more informed decisions.