Quarterly Earnings Overview and Trends

The latest results season has seen a notable acceleration in earnings growth compared to the preceding three quarters. The proportion of companies reporting positive results rose sharply to 67.0% in Dec-2025, up from 42.0% in Sep-2025, 40.0% in Jun-2025, and 44.0% in Mar-2025. This improvement signals a broad-based recovery in corporate earnings after a subdued performance earlier in the year.

However, this positive trend is unevenly distributed across market capitalisation segments. Large caps have recorded a 0.0% positive result rate this quarter, indicating challenges in sustaining earnings growth among the biggest companies. In contrast, mid caps have delivered a perfect 100.0% positive result rate, while small caps have also performed strongly with 78.0% positive results. This divergence highlights the growing importance of mid and small cap stocks in driving market returns and earnings momentum.

Sectoral and Company-Level Highlights

Among large caps, Tata Consultancy Services (TCS) stood out as a top performer within the Computers - Software & Consulting sector. Despite the overall lack of positive results in the large cap space, TCS’s resilient performance underscores its defensive qualities and ability to navigate challenging macroeconomic conditions.

In the mid cap universe, Indian Renewable Energy Development Agency emerged as a leader within the finance sector, reflecting the growing investor appetite for sustainable and green energy financing. The company’s robust earnings growth and strategic positioning in the renewable energy space have contributed to its standout results.

Small caps have been the brightest spot this quarter, with Krishana Phoschem Ltd. delivering the top overall results. Operating in the fertilisers sector, Krishana Phoschem reported exceptional financial metrics for the December 2025 quarter, including net sales of ₹659.11 crores, representing a staggering 116.79% year-on-year growth. Profit before tax (excluding other income) rose by 91.68% to ₹52.27 crores, while profit after tax increased by 62.3% to ₹33.32 crores.

Krishana Phoschem’s earnings per share (EPS) reached ₹5.39, the highest recorded in the last three months, while its debt-equity ratio remained conservatively low at 0.93 times. The company also reported a strong debtors turnover ratio of 4.20 times, indicating efficient receivables management. These metrics collectively point to a high-quality earnings growth story with solid balance sheet health.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 30 companies reporting this quarter reflects a broad-based recovery in corporate earnings. The surge in positive results from mid and small caps suggests that investors may find greater opportunities in these segments, which are benefiting from sectoral tailwinds and operational efficiencies.

Large caps, despite their dominant market capitalisation, have yet to show a meaningful turnaround in earnings. This may be attributed to sector-specific headwinds, global economic uncertainties, or transitional challenges in legacy businesses. Investors should monitor upcoming results closely, especially from heavyweight companies, to gauge whether this trend will persist.

Upcoming Results to Watch

Market participants will be closely watching the earnings announcements of several key companies scheduled for 13 Jan 2026. These include ICICI Prudential Life Insurance Company Ltd, Tata Elxsi Ltd., and Bank of Maharashtra. Their results will provide further clarity on sectoral trends and the sustainability of the current earnings momentum.

Quality and Financial Health Metrics

Krishana Phoschem’s performance exemplifies the quality of earnings that investors should prioritise. The company’s low debt-equity ratio of 0.93 times and high debtors turnover ratio of 4.20 times indicate prudent financial management and operational efficiency. Such metrics are crucial in assessing the sustainability of earnings growth, especially in volatile market conditions.

Similarly, the strong net sales growth of 116.79% and profit before tax growth of 91.68% highlight the company’s ability to scale revenues while maintaining profitability. These factors contribute to its mild bullish stance as of 01 Jan 2026, despite a slight decline in its financial score from 32 to 31 over the past three months.

Sectoral Patterns and Investor Takeaways

The fertilisers sector, represented by Krishana Phoschem, continues to benefit from favourable commodity prices and government policies supporting agricultural inputs. The finance sector’s mid cap leaders are capitalising on the growing demand for renewable energy financing, reflecting a thematic shift towards sustainability.

Investors should consider diversifying their portfolios to include mid and small cap stocks that demonstrate strong earnings quality and growth potential. While large caps remain important for stability, the current earnings season underscores the value of looking beyond the traditional blue-chip universe for alpha generation.

Conclusion

The December 2025 quarterly earnings season has delivered encouraging signs of recovery, driven predominantly by mid and small cap companies. With 67.0% of results positive and standout performances from companies like Krishana Phoschem and Indian Renewable, the market is witnessing a shift in earnings leadership. Large caps remain under pressure, but upcoming results from key players will be critical in determining the broader market trajectory. Investors are advised to focus on quality earnings growth, financial health, and sectoral themes to navigate the evolving landscape effectively.

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