In the current study, agro-industrial waste (banana peels and de-oiled groundnut cake) was valorised through submerged fermentation employing Calocybe indica. The fermented agro-waste revealed an increase in Ergosta-compounds, (3.57%), which include Ergosta-5,7,9(11),22-tetraen-3-ol,(3.beta.,22E)- (1.87%), Ergosta-5,7,22-trien-3-ol,(3.beta.,22e)- (1.24%) and Ergosta-7,22-dien-3-ol,(3.beta.,5.alpha.,22E)- (0.46%). A reduction of phytic acid (26.25–6.84 mg/100g), oxalate (81.82–18.69 mg/100g), water holding capacity (34.29–30.97 ml/g), least gelation concentration (18–12.5%), bulk density (6.82–2.28 g/ml) and swelling volume (9.5–6.1 ml/g) with an increase in β-glucan (8–24.57%), dispersibility (78.27–92.92%), oil holding capacity (0.59–1.73 ml/g), valine (ten-fold) and threonine (four-fold) seen in the fermented product makes it suitable for the food industry. GC-MS analysis confirmed the enriched levels of bioactive compounds namely, (S)-(−)-Perillyl alcohol, α.-Longipinene, isozonarol, widdrol, hydroxy valerenic acid, reynosin, β-Eudesmol, lupenone, etc. in fermented agro-waste mixture. The valorised agro-waste-mycelia mixture can be used as a potential nutraceutically enriched health supplement in the food and pharma industries.