Mutual Funds Increase Stakes in New-Age Unicorn IPOs, Signaling Strong Confidence in India’s Tech Leaders

India’s domestic mutual funds are showing renewed confidence in the country’s new-age technology-driven companies, significantly increasing their stakes in several recently listed unicorn startups during the March quarter. This shift marks a notable turnaround in sentiment, especially considering that many of these companies had earlier faced skepticism over their valuations, profitability timelines, and long-term business sustainability.

The latest shareholding data highlights that mutual funds raised their exposure across five major new-age companies that went public after achieving unicorn status. This broad-based buying trend indicates a structural shift in how institutional investors view India’s digital economy and platform-based businesses.

Among the biggest beneficiaries of this trend is Urban Company, which emerged as a top investment target for domestic fund managers. Mutual funds collectively invested around Rs 900 crore in March alone, acquiring approximately 74 million shares. This aggressive buying pushed their total holding to nearly 130 million shares, resulting in a sharp increase in ownership from 3.84% in the December quarter to 8.98% by the end of March. The scale of this increase reflects growing confidence in the platform economy and Urban Company’s long-term growth prospects.

The electric mobility space also attracted strong investor interest, particularly in Ather Energy. Mutual fund holdings in the company rose from 18% to 20.5% during the quarter. Analysts believe that Ather is well-positioned to benefit from the rapid growth of India’s electric two-wheeler market, which is expected to expand at a strong pace in the coming years. Some brokerage projections even draw comparisons with global EV success stories, suggesting that profitability milestones could act as key triggers for stock performance in the future.

Eyewear retailer Lenskart also witnessed fresh institutional interest, with several mutual funds initiating new positions. This led to an increase in aggregate mutual fund holding from 5.6% to 6.4%. Despite already being one of the largest tech-driven eyewear companies in India, Lenskart still holds a relatively small share of the overall market, leaving significant room for expansion. Its omnichannel strategy and efficient store economics are seen as major drivers of future growth.

In the e-commerce segment, Meesho attracted new investors, including major domestic fund houses. While the increase in mutual fund holding was relatively modest—from 4.6% to 4.9%—it signals growing institutional interest in value-driven e-commerce models that focus on tier-2 and smaller markets. With rising internet penetration and increasing digital adoption in non-metro regions, Meesho is expected to benefit from long-term structural growth trends.

Edtech platform PhysicsWallah also saw a notable rise in mutual fund participation. Fund managers acquired millions of shares during the quarter, pushing overall holdings from 4.8% to 5.6%. The company is still in the early stages of monetization, but strong revenue growth projections and improving margins have made it an attractive bet for long-term investors. Analysts believe that its scalable model and strong brand recognition in the education sector position it well for sustained growth.

The increasing participation of mutual funds in these companies reflects a broader change in market dynamics. Unlike earlier years, when foreign institutional investors played a dominant role in backing new-age tech firms, domestic investors are now taking the lead. This shift is supported by deeper research coverage, improved financial transparency, and clearer profitability roadmaps from these companies.

At the same time, the optimism is not without risks. Competitive pressures remain intense across sectors, particularly in e-commerce and quick commerce. Companies like Meesho must continue to differentiate themselves in a crowded market, while Ather Energy faces policy-related uncertainties such as changes in government incentives for electric vehicles. Similarly, firms like Lenskart and PhysicsWallah carry premium valuations, which require consistent execution and strong financial performance to justify investor expectations.

Macroeconomic factors also play a role, as global uncertainties and geopolitical tensions can impact investor sentiment and market stability. Despite these challenges, the consistent increase in mutual fund holdings, combined with positive long-term growth projections, suggests that domestic institutional investors are increasingly willing to back India’s next generation of technology-led businesses.