Key facts
- Helios Mutual Fund is reallocating assets from large-cap stocks to mid and small-cap companies.
- Midcap earnings grew 28% and smallcap earnings grew over 41% in Q4 FY26, significantly outpacing Nifty 50's 6% growth.
- On a price-to-earnings-to-growth (PEG) basis, smallcaps are the cheapest market segment, followed by midcaps.
- New additions to the portfolio include Adani Enterprises, Dixon Technologies, and CAMS.
- Sectors being avoided include metals, US-facing pharmaceuticals, and consumer durables.
- The fund's healthcare strategy focuses on hospital stocks due to structural scarcity and secular tailwinds.
Helios Mutual Fund is strategically shifting its investment focus from large-cap stocks to mid and small-cap companies, a move driven by the significantly higher earnings growth observed in the latter segments. In the fourth quarter of fiscal year 2026, midcap earnings saw a 28% year-over-year increase, while smallcap earnings surged by over 41%, starkly contrasting with the 6% growth reported by Nifty 50 companies.
Dinshaw Irani, Fund Manager at Helios Mutual Fund, highlighted that while mid and smallcaps may appear expensive on a standalone price-to-earnings (PE) basis, they become more attractive when considering growth prospects. On a price-to-earnings-to-growth (PEG) basis, smallcaps are currently the cheapest segment of the Indian market, followed by midcaps. Conversely, largecaps, despite appearing optically cheap on PE, are considered the most expensive once growth is factored in.
"Wherever the correction has happened, we have been picking up the mid and smallcaps. We are moving away from largecaps and getting into new names in these segments wherever possible," Irani stated. The fund has recently added Adani Enterprises, citing its aggressive expansion into solar energy manufacturing. Dixon Technologies was acquired at lower levels following the resolution of concerns regarding Chinese joint ventures, positioning it as a key beneficiary of India's Production Linked Incentive (PLI) scheme. CAMS was added as a direct play on the robust growth of India's mutual fund industry.
Helios has exited positions in Tata Motors CV, due to concerns over rising crude oil prices impacting commercial vehicle demand, and Titan, a move Irani admitted might have been premature given the company's strong growth guidance. The fund is actively avoiding sectors such as metals, where it sees risks from Chinese supply dominance, and US-facing pharmaceutical companies due to challenges with patent expiries and high R&D costs. Consumer durables are also largely avoided, with only a pickup in fans noted, while largecap banks, previously a defensive holding, have been trimmed to reallocate capital to growth-oriented sectors.
Within the healthcare sector, Helios's exposure is concentrated in hospital stocks rather than pharmaceutical companies. The fund views quality healthcare capacity as structurally scarce and a secular growth area driven by rising per-capita GDP. While some domestic pharmaceutical and contract development and manufacturing organization (CDMO) names are held, hospitals remain the core thesis. Irani emphasized that India presents ample opportunities for continuous deployment of capital, with the fund holding minimal idle cash due to daily inflows.