Investment institutions (FIIs) are increasing their holdings in five potential high-profit stocks for the year 2025.

Investment institutions (FIIs) are increasing their holdings in five potential high-profit stocks for the year 2025.

Foreign Investors Flock to Indian and Global Small-Cap Stocks

Foreign Institutional Investors (FIIs) have shown a significant interest in small-cap stocks, both in India and globally, in 2025. In the Indian market, seven multibagger winners within the BSE Smallcap universe have attracted the attention of FIIs, including Force Motors, SML Isuzu, Mangalore Chemicals, Camlin Fine Sciences, Gabriel India, Suven Life Sciences, and Axiscades Technologies [1].

In India, these stocks have seen remarkable growth, with Force Motors' FII stake rising from 8.36% to 9.77%, resulting in a 157% return for the stock by August 1, 2025 [1]. All seven of these stocks received perfect momentum scores of 5/5 according to Share.Market analysis [1].

The buying patterns of FIIs in these Indian small-caps have caught the eye of domestic investors.Camlin Fine Sciences, for instance, has seen its FII shareholding increase from 1.47% in March 2025 to 2.88% in June 2025 [1]. Similarly, Axiscades Technologies' FII holdings have increased from 0.69% in March 2025 to 1.62% in June 2025 [2].

Globally, small-cap stocks, especially outside the U.S., have outperformed large caps in 2025. The MSCI AC World ex U.S. Small Cap Index returned 12.22% through July 22, outperforming the S&P 500's 7.99% [2].

In the U.S. market, a distinct set of small-cap stocks has also displayed exceptional returns, with several small-cap stocks delivering returns well over 700% year-to-date as of mid-August 2025 (e.g., Zepp Health Corp ADR +1059%, United States Antimony Corp +1010.82%) [3]. However, the direct participation of FIIs in these U.S. small caps is less emphasized in the data available.

In the Indian context, Zinka, which operates under the BlackBuck brand and offers a digital trucking platform, has also seen strong FII buying. Zinka's shares have delivered a 114% gain in 2025 [1]. The company's FII holdings have increased to over 20% in June 2025 from 11.6% in March 2025 [1]. Monthly transacting truck operators for Zinka rose 20.8% YoY to 720,000 in FY25 [1].

Zinka's total income climbed 62-63% YoY to Rs 1.6 bn in Q1FY26, with an operating cash flow of Rs 630 m in Q1FY26, aided by upfront subscription collections [1]. Reported EBITDA for Zinka surged 4x to Rs 400 m in Q1FY26 [1]. The company's PAT came in at Rs 340 m in Q1FY26 [1].

Force Motors, a manufacturer of fully vertically integrated small and light CVs, multi-utility vehicles, and agricultural tractors, has also seen strong growth. In FY25, the company's profit more than doubled to Rs 8 bn compared to Rs 3.9 bn reported in FY24 [1]. Demand for LCV and MUVs has bounced back strongly with school openings and a pick up seen in travel, which could potentially allow Force Motors to capture more market share going forward [1].

In FY25, Force Motors reported a net worth of Rs 24.02 bn [1]. The company's shares have delivered a 145% gain in 2025 [1]. Force Motors has increased its market share to over 16% in the electric 2-wheeler space [1].

In summary, foreign institutional investors are buying into a select group of small-cap stocks that have already returned over 100% in 2025. These small-cap stocks operate in diverse sectors such as specialty chemical, auto, engineering, services, and logistics [1]. In several cases, stakes have climbed by over a percentage point in just three months [1].

References: 1. Source 1 2. Source 2 3. Source 3

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