4 stocks where cash-rich mutual funds are showing faith

Summary: In today’s high-priced market, a few selective funds are holding unusually large cash piles. They are being selective to find bets that offer real value. We tracked their latest moves and uncovered the 4 stocks they’re backing. Read on to find the list.

When markets are frothy, it’s easy to get swept up in rallies and buy at inflated prices. That’s why tracking what mutual funds sitting on cash are buying can be especially instructive. These are funds that could hold unusually high levels of cash—15 per cent or more—in expensive markets as they choose to be selective. Watching their purchases can help investors spot where seasoned, valuation-conscious managers still see opportunity, even when the broader market is chasing momentum. 

Two such funds in the current market are Parag Parikh Flexi Cap and ICICI Prudential Smallcap. Both are sitting on about 23 per cent and 15 per cent cash, respectively, signalling how they are choosing restraint over action.

That doesn’t mean these funds have gone into hibernation. Volatile markets often toss up opportunities and both funds have quietly used the noise to add to select positions.

To see where their conviction lies, we tracked mutual fund shareholding over the past six months and looked for companies where these two funds have raised at least 1 per cent stake each. Below are the four names that stood out.

1) Indian Energy Exchange

Think of Indian Energy Exchange (IEX) as India’s electricity bazaar: buyers and sellers meet, bids are matched and the lights stay on. In FY25, IEX traded about 121 billion units of power, up 19 per cent year on year. Roughly one in eight units of electricity is bought in the short-term market and exchanges handle about half of that.

A key overhang remains the market coupling framework set to roll out in phases from January 2026.

Market coupling will centralise price discovery across all power exchanges in India, meaning IEX will no longer unilaterally set electricity prices. Since trade will be routed via a common market coupling operator, this could erode IEX’s dominant market share and compress its pricing power. Shares have already de-rated on this risk and now trade in the high-20s P/E range—not bargain basement but far from bubble territory.

2) Jamna Auto

Jamna Auto dominates the essential business of supplying leaf springs (suspension component) for medium and heavy trucks, holding a market share of around 62–65 per cent. Its next chapter is to broaden that base. The company has a Rs 5,000-crore revenue target over five years, with aftermarket sales and export segments expected to make up a significant 40 per cent of revenue. While OEM dominance remains its crown jewel, the real compounding story lies in the aftermarket, where demand is recurring and less cyclical.

To raise its value per vehicle metric, the company is setting up an integrated suspension facility, slated for December 2026, to add parabolic and air suspension systems. The stock is trading in the low-20s P/E range, reasonable for a category leader if execution stays on track.

3) Century Enka

Century Enka operates in a slow-and-steady space, producing nylon filament yarn for textiles and tyre-cord fabric for the auto sector. It is now expanding into polyester tyre-cord fabric for car radials. Its two plants, at Pune and Bharuch, supply customers with sticky approvals that are hard to win and harder to lose—an underappreciated moat.

Recent quarters have been challenging. A fire at the Bharuch plant in February 2025 disrupted volumes until June, while cheaper Chinese imports pressured margins. The company’s response: push value-added yarns, trim energy costs with renewables and scale up polyester approvals. Market share stands near 23 per cent in nylon filament yarn and 25 per cent in tyre-cord fabric. The stock is trading in a high-teens P/E range—reasonable if spreads recover, less so if imports keep biting.

4) EID Parry

EID Parry is best known for sugar, but its real kicker is biofuels. The company runs six sugar plants with a daily cane-crushing capacity of 40,800 tonnes and 582 kilo litres of distilleries. It also holds a 56 per cent stake in Coromandel International, providing stability during volatile sugar seasons.

With India achieving 20 per cent ethanol blending in 2025, policy momentum is firmly behind its distillery business. The company is also experimenting with consumer staples like rice, dals and millets under the Parry’s brand—small today but distribution-friendly. The risks, as always in sugar, are weather and policy swings. The stock trades in the high-teens P/E band, reasonable as long as distilleries run full and the staples business scales up.

Your takeaway

So, why follow cash-heavy funds? Because they are refusing to get swept up in market frenzy. Holding cash is a conscious, deliberate choice. And when these managers do buy, it signals where real value may still be hiding. For investors, that’s a lesson worth more than watching who’s chasing the next hot rally. Patience, selectivity and conviction often speak louder than momentum.

Where to invest with selectivity and conviction?

If you’d like to go beyond fund trackers and see a thoroughly researched list of stocks we believe can compound wealth over the long run, explore Value Research Stock Advisor. Our recommendations are built on the same principles of patience, selectivity and conviction that set great investors apart.

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Also read: As mid caps reclaim highs, these 10 stocks are still cheap

This article was originally published on October 01, 2025.