A Mint analysis of 1,335 BSE-listed firms that have disclosed their shareholding details for the June quarter showed that retail shareholding rose in more than 44% (595 firms) of these companies. Of these, 38 stocks saw a simultaneous drop in foreign portfolio investors (FPIs) and mutual fund holdings. Many of these companies operate in sectors such as capital goods, infrastructure, auto components, and pharma.
“The surge in retail inflows into small and mid cap stocks in Q1 FY26 reflects momentum chasing, mobile trading access, and online investor conviction even as institutions turned cautious. FPIs and mutual funds shifted to large caps, highlighting a classic late-cycle divergence in sentiment and positioning,” said Smit Dasani, research analyst at Invasset PMS.
A look at five such companies – M M Forgings, Kesoram Industries, Anant Raj, Transformers & Rectifiers, and Jyoti Structures – reveals a striking divergence between institutional and retail moves in Q1FY26 on a sequential basis. Retail investors seem to be betting big on them while institutions are fearful.
M M Forgings: A comeback story
Retail investors returned to M M Forgings, a small cap auto components company, in a dramatic way. Retail shareholding jumped nearly 16 percentage points (pps) in the June quarter after a near exit in the previous quarter, data sourced from Capitaline showed. Individuals (holding nominal share capital up to ₹2 lakh) held a share of 13.9% as of December 2024.
Meanwhile, foreign portfolio investors (FPIs) trimmed their stake by 1.25 pps to 3.4%, and mutual funds cut holdings by 0.61 pps to 7.2%. Interestingly, the company delivered a 13% return in Q1FY26, possibly leading to profit-booking by institutional investors.
The company registered a 9.6% fall in net profit for FY25 and trades at a P/E ratio of 16.9, below its five-year median of 18.9. Analysts at Anand Rathi have maintained a ‘buy’ rating on the stock with a reduced 12-month target price of ₹480, citing steady earnings growth and 11% earnings-per-share growth over FY25-27.
Kesoram Industries: Cement exit, retail entry
Kesoram Industries, a BK Birla Group company, recently demerged its cement business, which was subsequently merged with UltraTech. It will now focus on its rayon and transparent paper businesses. Retail ownership in the company rose 5.5 pps sequentially to 13% in Q1FY26.
Meanwhile, mutual funds completely exited the stock and FPIs reduced their stake by around 200 basis points (bps) to 2.4%. This follows a steady FPI selloff since June 2024. The stock rewarded investors with a 43.4% return in the quarter, despite a widening net loss of ₹99.3 crore and a 9% drop in revenue from continuing operations.
“The demerger of the cement business to UltraTech may have sharpened investor focus on the core segments. While institutions exited on earnings pressure, retail seems to be banking on the restructuring story playing out,” said Dasani.
Anant Raj: Betting on data center growth
Real estate firm Anant Raj saw retail investors raise their stake by 260 bps to 13.15% in Q1FY26. Meanwhile, FPIs cut their holding by 2 pps and mutual funds pared their stake by 0.5 pps, continuing the institutional selloff since March.
The stock, however, posted a negative return of 8.1% during the quarter, weighed down by rich valuations. It trades at a P/E of 47.7, slightly above its five-year medianof 44.05.
Despite this, brokerage Emkay research is optimistic, maintaining a ‘buy’ rating with a target price of ₹800. The company recently commissioned its second data center at Panchkula and plans to ramp up total capacity to 63 MW in two years. Analysts expect data centre revenue to grow 15-fold by FY27, funded largely via internal accruals, keeping debt levels in check.
Transformers & Rectifiers: Capacity expansion, retail confidence
Transformers & Rectifiers India, a key supplier of high-voltage transformers, saw a 1.5 pps rise in retail holding in Q1FY26 to 15.9%. FPIs and mutual funds cut their stakes by 0.36 and 1.03 pps, respectively.
The stock declined 2.8% during the quarter even as FY25 revenue grew 56% year-on-year to ₹2,016 crore and PAT jumped nearly 360% to ₹216 crore, leading to margin expansion.
According to an Anand Rathi report, the company’s ongoing capex—including 37,000 MVA of additional capacity–could turn it into a market leader. A ₹550-crore investment is being fully funded through a recent qualified institutional placement (QIP) and internal cash flows, with no major debt planned. The brokerage has initiated coverage with a ‘buy’ rating and a target of ₹670, even though the stock trades at a huge P/E of 70.1.
Jyoti Structures: Quiet rise in retail interest
Jyoti Structures, a small-cap heavy electrical equipment firm, saw its retail holding rise by 1.26 pps to 36.66%, marking its highest addition in three quarters. Institutional investors were net sellers; FPIs reduced their stake by 1.07 pps, while mutual funds trimmed their stake by 0.06 pps.
The stock posted a modest Q1 return of 6.4% and is trading at a P/E ratio of 49.1, below its five-year median of 64.3, indicating possible room for a re-rating. “The company has been steadily improving execution and financials after emerging from the corporate insolvency process a few years ago,” said Dasani.
