Why this comparison isn't about which strategy is "better"
This comparison assumes you already have the full amount available today and are only deciding how to deploy it — lumpsum all at once, or spread evenly as SIP installments over the same period. That's a genuinely different question from "should I save via SIP or not," which usually compares SIP against not investing that money each month at all. Here, both paths use the exact same total money and the exact same assumed return rate.
A worked example
₹6,00,000 invested as a lumpsum at 12% p.a. for 5 years grows to about ₹10,57,405. The same ₹6,00,000 spread evenly as ₹10,000/month SIP installments over the same 5 years, at the same 12% p.a. rate, grows to about ₹8,24,864 — a gap of roughly ₹2,32,541 in the lumpsum's favor, purely from timing. The lumpsum's entire ₹6,00,000 compounds from day one; the SIP's later installments (the 59th month's ₹10,000, for instance) barely have any time to compound at all before the 5-year mark.
Why the gap exists — it's the same mechanic as FD vs RD
This is structurally identical to the FD-vs-RD comparison covered elsewhere on this site: a lump sum earning interest/returns for the full period will always outperform an equivalent total spread across staggered installments at the identical rate, because later installments simply have less time to compound. The gap isn't a flaw in SIP investing — it's the direct, unavoidable mathematical consequence of when each rupee starts earning returns.
Why SIP is still the common advice for most people
This comparison only applies when you genuinely already hold the full lumpsum today — for most people building wealth from ongoing income, the real alternative to a monthly SIP isn't a lumpsum sitting ready to invest, it's not having invested that money at all yet. SIP's real advantage is disciplined, automatic investing of money as it's earned, plus averaging your purchase price across market ups and downs (rupee-cost averaging) — neither of which this pure "same total, different timing" comparison is designed to capture.
When lumpsum genuinely applies
This comparison is directly relevant when you receive a windfall — a bonus, an inheritance, maturity proceeds from another investment — and are deciding whether to deploy it immediately or stagger it in as a SIP instead. All else equal (same expected return, no market-timing concerns), investing it immediately as a lumpsum grows to more by the same reasoning shown above — the staggering itself has a real, quantifiable return cost, though some investors accept that cost deliberately to reduce the risk of deploying the whole amount right before a market downturn.