Top 10 High-Growth Midcap Stocks Mutual Funds Are Betting On in 2025

2025 has brought a significant change to the Indian stock market, with investors showing greater interest in the midcap space. These companies, typically valued between ₹5,000 crore and ₹20,000 crore in market capitalization, have emerged as the preferred choice for investors seeking a balance of strong growth potential and manageable risk—making them an attractive alternative to the traditional large-cap giants.

One of the major catalysts driving this momentum is the role of mutual funds. Fund managers have steadily increased their exposure to midcap companies, recognizing their strong fundamentals and long-term growth prospects. Many of these businesses are not only reporting impressive revenue and profit growth but are also offering attractive dividend payouts for FY26, further boosting investor confidence.

In this guide, we highlight the best-performing midcap stocks in 2025—companies that:

• Demonstrate stable and scalable business operations
• Attract strong interest from institutional and retail investors
• Show consistent growth in market capitalization

For investors eager to understand midcap dynamics and make informed decisions, this is the right time to explore opportunities in this segment. Backed by mutual fund confidence and robust business performance, midcap stocks are set to play a vital role in shaping the next phase of wealth creation in India.

Midcap stocks represent companies with a medium market capitalization, typically ranging between ₹5,000 crore and ₹20,000 crore. These firms are generally more established than small-cap companies but still have significant room to grow compared to large-cap giants. Midcap companies often operate in emerging sectors or dominate niche markets, making them attractive to investors seeking a balance of growth and stability.

Key Characteristics of Midcap Stocks

• Growth Potential: Midcap stocks often grow faster than large-cap stocks due to expansion opportunities and market penetration.
• Moderate Risk: While riskier than large caps, they are generally more stable than small-cap stocks.
• Liquidity: Midcap stocks usually have decent trading volumes, though slightly lower than large caps, which can impact price movements.
• Innovation & Agility: Many midcap companies are nimble and can adapt quickly to market changes, giving them a competitive edge.

The Role of Midcap Funds in Investment Portfolios

Including midcap stocks in an investment portfolio offers a strategic blend of growth and diversification. They provide investors the opportunity to capture higher returns than large-cap stocks while reducing some of the volatility associated with small-cap investments. This is why mutual funds often allocate a portion of their portfolios to midcaps, enhancing returns and mitigating risk exposure.

Comparison of Large-Cap vs Midcap vs Small-Cap Stocks

Midcap stocks provide a sweet spot for investors who want meaningful growth potential without taking on the extreme risks associated with small-cap stocks. With strong fundamentals and high growth prospects, midcap companies continue to attract increasing attention from mutual funds and retail investors alike.

To identify the top-performing midcap stocks in 2025, we focused on three crucial criteria that reflect business performance, investor confidence, and overall market momentum. These factors highlight companies that are not only financially strong but also gaining significant traction among mutual funds and retail investors.

1. Revenue and Profit Growth Metrics

A primary measure of a company’s financial health is its ability to consistently grow revenue and profit. The stocks featured in this guide have posted over 15% year-on-year growth in both revenue and profit during FY25. This demonstrates strong fundamentals and operational efficiency. Such consistent growth not only shows expansion but also the ability to convert revenue into sustainable profits—making these companies highly attractive to long-term investors and mutual funds.

2. Increase in Mutual Fund Holdings

Institutional interest is a key indicator of market confidence. The highlighted midcap stocks have witnessed significant increases in mutual fund holdings during the June 2025 quarter. This rise reflects the trust of professional investors who conduct in-depth evaluations before allocating capital. Growing mutual fund stakes provide both stability to stock prices and act as a catalyst for further market momentum.

3. Stock Price Appreciation in FY26

Beyond financial performance and institutional backing, stock price appreciation showcases how the market values these companies. Since April 2025, the selected midcap stocks have delivered impressive gains in FY26, with price increases ranging between 10% and 45%. This upward momentum, supported by strong fundamentals and mutual fund confidence, makes these stocks particularly compelling for investors looking to capture growth opportunities.

By applying these three criteria, investors can filter out midcap stocks that not only demonstrate solid financial performance but also enjoy growing market momentum and institutional trust. This makes them strong candidates for wealth creation in the evolving Indian stock market of 2025.

Investors and mutual funds are increasingly turning their attention to midcap stocks that combine strong fundamentals, market momentum, and institutional backing. Here’s a close look at the top 10 midcap stocks making waves in FY26:

1. Vishal Mega Mart

Stock Performance: 43% gain (₹104 → ₹149)
Mutual Fund Holdings: 11.35% → 25.69%

Key Growth Drivers: Rapid expansion of retail outlets, strong same-store sales growth, and increased consumer demand in tier-2 and tier-3 cities. Mutual funds have significantly increased their stake, reflecting strong institutional confidence.

2. Nippon Life India Asset Management

Stock Performance: 38% gain (₹578 → ₹800)
Mutual Fund Holdings: 8.00% → 8.85%

Growth Drivers: Strong AUM growth, innovative fund offerings, and robust financial performance. Positive market sentiment and rising investor participation are fueling momentum.

3. AU Small Finance Bank

Stock Performance: 35% gain (₹534 → ₹722)
Mutual Fund Holdings: 20.17% → 20.55%

Financial Insights: Consistent loan book growth, improving asset quality, and strong net interest margins position this bank as a midcap financial sector leader.

4. Dixon Technologies (India)

Stock Performance: 33% gain (₹13,180 → ₹17,586)
Mutual Fund Holdings: 17.20% → 21.12%

Highlights: Cutting-edge electronics manufacturing, increasing export orders, and strategic partnerships with global brands make Dixon a technological frontrunner.

5. Cummins India

Stock Performance: 27% gain (₹3,050 → ₹3,880)
Mutual Fund Holdings: 16.63% → 16.78%

Growth Outlook: Focus on sustainability, energy-efficient solutions, and strong industrial demand supports steady revenue and profit growth.

6. Muthoot Finance

Stock Performance: 14% gain (₹2,382 → ₹2,711)
Mutual Fund Holdings: 10.03% → 10.24%

Sector Insights: Strong gold-backed lending portfolio, robust loan disbursal growth, and an expanding customer base are driving financial sector resilience.

7. Bank of Maharashtra

Stock Performance: 13% gain (₹46 → ₹52)
Mutual Fund Holdings: 0.90% → 0.97%

Highlights: Benefiting from government initiatives, improving asset quality, and growing adoption of digital banking in the public sector space.

8. Premier Energies

Stock Performance: 11% gain (₹938 → ₹1,036)
Mutual Fund Holdings: 5.71% → 8.28%

Growth Drivers: Expanding solar energy projects, government incentives, and rising renewable energy adoption in India.

9. Waaree Renewables

Stock Performance: 36% gain

Sector Position: A strong foothold in renewable energy manufacturing, particularly solar panels, positions Waaree for sustained sectoral growth.

10. Anand Rathi Wealth

Stock Performance: 27% gain

Sector Insights: Rapid expansion in wealth management services, growth of advisory solutions, and rising investor demand are driving robust financial performance.

These 10 midcap stocks stand out in FY26 due to their strong fundamentals, rising mutual fund backing, and solid market momentum—making them compelling opportunities for investors seeking growth in India’s evolving stock market.

The top 10 high-growth midcap stocks highlighted in this blog span a diverse range of sectors, showcasing the dynamic opportunities in the Indian economy. By analyzing sectoral performance, investors can identify emerging trends and gauge long-term growth potential.

1. Retail Sector

Representative Stock: Vishal Mega Mart

Insights: The retail sector is thriving due to rising consumer spending, expansion into tier-2 and tier-3 cities, and the growing adoption of organized retail. With consistent revenue growth and strong scalability, mutual funds remain bullish on retail-focused midcaps.

2. Financial Services & Banking

Representative Stocks: AU Small Finance Bank, Muthoot Finance, Bank of Maharashtra, Anand Rathi Wealth

Insights: Financial services and mid-sized banks are witnessing robust loan book growth, improved asset quality, and deeper penetration into underbanked regions. Wealth management firms are expanding rapidly as investor participation grows. Institutional backing in this sector reflects confidence in sustainable long-term growth.

3. Technology & Electronics Manufacturing

Representative Stock: Dixon Technologies (India)

Insights: Midcap players in the electronics and technology space are benefiting from global demand and India’s growing manufacturing ecosystem. Innovation, export orders, and partnerships with global brands make this sector attractive to mutual funds seeking high growth potential.

4. Industrial & Engineering

Representative Stock: Cummins India

Insights: Industrial and engineering midcaps focusing on sustainability and energy efficiency are experiencing consistent demand. Expansion into renewable and energy-efficient solutions enhances their appeal for long-term institutional investment.

5. Renewable Energy

Representative Stocks: Premier Energies, Waaree Renewables

Insights: Renewable energy midcaps are benefiting from government incentives, global climate initiatives, and India’s rising domestic energy needs. Mutual funds are increasing their exposure to this sector, expecting strong financial returns alongside ESG-aligned growth.

Sectoral Performance and Future Trends

• Retail & Consumer: Expected to grow steadily with rising urbanization and increasing disposable incomes.
• Financial Services: Likely to benefit from digital adoption, expanding credit penetration, and the growing demand for wealth management solutions.
• Technology & Manufacturing: Strong export opportunities and continuous technological innovation will drive growth in this sector.
• Renewable Energy: Supportive government policies and global ESG initiatives will sustain momentum and attract long-term investments.

Mutual funds leverage these sectoral insights to diversify portfolios, manage risks, and capitalize on growth opportunities. This makes sector analysis a critical part of their investment strategy when identifying promising midcap stocks for future wealth creation.

Midcap stocks are gaining investor attention for their substantial growth potential and strong returns. Companies such as Vishal Mega Mart, Dixon Technologies, and AU Small Finance Bank have demonstrated impressive performance, backed by rising mutual fund investments. For retail investors, the key lies in focusing on businesses with solid fundamentals and institutional support, while ensuring diversification across sectors like retail, finance, technology, and renewable energy.

While midcap stocks may experience short-term volatility, they offer significant long-term growth opportunities. With India’s ongoing economic expansion and sectoral growth momentum, midcap stocks are well-positioned to deliver strong performance in 2025 offering investors a balance of both momentum and stability.

To maximize these opportunities, investors can also leverage next-gen advanced MFD software like Jezzmoney, which helps track, analyze, and optimize investments more effectively. By combining strong stock selection with smart digital tools, investors can align their portfolios with long-term growth and wealth creation.