Conglomerates theme: Should you buy the ICICI Prudential Conglomerate Fund?

The New Fund Offer (NFO) opens on October 3, 2025 and will close on October 17, 2025.

When you think of India’s largest business houses—Reliance, Tata, Adani, Mahindra—what comes to mind? Scale, resilience, and the ability to diversify across sectors. These are conglomerates: promoter-led groups that own multiple listed companies, often spanning industries as diverse as steel, telecom, energy, retail, cement, and even semiconductors.

ICICI Prudential Mutual Fund is now giving retail investors a chance to participate in this growth story with the launch of its ICICI Prudential Conglomerate Fund, an open-ended equity scheme following the conglomerate theme.

The New Fund Offer (NFO) opens on October 3, 2025 and closes on October 17, 2025.

What is a Conglomerate?

 

A conglomerate is essentially a promoter-led business group with two or more listed companies across industries. Think of it like a train with different compartments—steel, power, retail, telecom—all pulled together by one strong driver: the promoter group.

Unlike standalone companies that are vulnerable to sector-specific risks, conglomerates operate across sectors, making them more resilient. For instance, Tata Group spans automobiles, IT services, steel, financial services, and retail. Reliance has pivoted from textiles to petrochemicals, then into telecom, retail, and now renewable energy.

Why Conglomerates Appeal to Investors

Conglomerates enjoy several structural advantages:

Deep Pockets: With high operating cash flows and large balance sheets, they can weather downturns, pursue capex, and invest in sunrise sectors.

Lower Cost of Capital: Better credit ratings allow them to borrow cheaper.

Economies of Scale: Shared resources, large customer bases, and technology tie-ups enhance efficiency and drive cross-selling.

Diversification Benefits: Revenue streams across sectors cushion the impact of downturns.

 

Ability to Expand into Sunrise Sectors: Renewable energy, semiconductors, electric vehicles, nuclear power—conglomerates are already at the forefront.

 

M&A Muscle: With deep pockets, they can buy distressed assets in downturns, further consolidating market share.

 

A historical look shows that during crises—from telecom disruptions to NBFC meltdowns—conglomerates not only survived but often gained market share as smaller players struggled.

 

Why Now?

 

Global and domestic factors make conglomerates particularly attractive in the current environment:

 

Global Volatility: Reciprocal tariffs, rising interest rates, and supply chain disruptions are hurting smaller companies. Conglomerates with diversified models are better placed.

 

Rising Representation in Indices: Conglomerates’ weightage in the Nifty 100 has steadily increased, underscoring their growing influence.

 

Stable Earnings: In weak cycles, conglomerates have demonstrated more stable profitability compared to standalone peers.

 

Data from Nuvama shows conglomerates’ share in the Nifty 100 has risen consistently over the last decade, making a case for a dedicated thematic fund.

 

ICICI Prudential Conglomerate Fund – Key Details

Type: Open-ended equity scheme following conglomerate theme

NFO Dates: October 3 – October 17, 2025

Benchmark: BSE Select Business Groups Index

Fund Manager: Lalit Kumar

Minimum Application: ₹1,000

Exit Load: 1% if redeemed within 12 months; nil thereafter

Investment Universe: Around 71 conglomerate groups with 240 listed companies spanning large, mid, and small caps

The scheme will have the flexibility to invest across market caps and sectors, combining structural strengths (like strong promoters, durable businesses) with cyclical opportunities (such as commodity upcycles).

Who Should Consider This Fund?

The ICICI Prudential Conglomerate Fund is a thematic fund. That means it focuses on a specific idea—in this case, conglomerates—rather than diversifying across the broader market. Thematic funds tend to be cyclical, with phases of strong outperformance followed by periods of underperformance.

Investors who may consider this fund include:

Long-term investors with at least a 5–7 year horizon.

Those seeking exposure to India’s largest business houses, which are well positioned to benefit from structural reforms and global opportunities.

Investors comfortable with concentration risk, since the portfolio will revolve around a select group of conglomerates.

Seasoned investors looking to complement their core diversified equity portfolio with a thematic allocation.

Risks to Keep in Mind

Concentration Risk: While the fund will invest in about 240 companies, the effective concentration will be on a handful of business groups.

Sectoral Overlaps: Many conglomerates operate in cyclical industries like metals, cement, and energy, which can lead to higher volatility.

Governance Concerns: Promoter-led groups sometimes face governance issues, which can hurt shareholder value.

Thematic Nature: The fund’s performance will hinge on how well conglomerates do compared to standalone companies and the broader market.

As with all thematic funds, allocation should be limited—financial advisors typically recommend 5–10% of an investor’s equity portfolio.

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing.