Quarterly Earnings Trends: A Gradual Recovery

The latest quarter saw a clear improvement in the share of companies reporting positive earnings growth, rising to 54.0% from 43.0% in the previous quarter. This upward trajectory is encouraging after a challenging first half of the fiscal year, where only 40.0% of firms posted gains in June and 44.0% in March. The data suggests that businesses are beginning to stabilise amid ongoing macroeconomic uncertainties, with some sectors showing stronger resilience than others.

However, the improvement is not uniform across market capitalisation segments. Large caps lag behind with only 37.0% of companies reporting positive results, reflecting the pressure on established giants to sustain growth amid competitive and regulatory headwinds. In contrast, mid caps have outperformed with 61.0% positive results, while small caps also showed strength at 56.0%, indicating that smaller and more agile companies are currently better positioned to capitalise on emerging opportunities.

Sectoral Highlights and Standout Performers

Among the large caps, Piramal Finance emerged as a top performer, demonstrating robust earnings growth despite the broader challenges faced by the financial services sector. The company’s ability to maintain credit quality and expand its loan book has been instrumental in its strong showing this quarter.

In the mid cap space, Laurus Labs from the Pharmaceuticals & Biotechnology sector delivered impressive results, benefiting from sustained demand for healthcare products and a growing export order book. The company’s focus on research and development and operational efficiencies has translated into improved margins and earnings upgrades.

Small caps also had their share of winners, with Indo Thai Securities in the Capital Markets sector posting solid gains. The firm’s strategic positioning in brokerage and investment advisory services has helped it navigate volatile markets effectively.

Micro Cap Leaders and Emerging Opportunities

Micro cap companies have been particularly noteworthy this quarter. String Metaverse, operating in the Paper, Forest & Jute Products sector, topped the charts with remarkable earnings growth, driven by niche market demand and cost optimisation. Similarly, Sera Investments, a Non-Banking Financial Company (NBFC), showcased strong credit growth and asset quality, positioning itself well for future expansion.

Recent Key Results: Axis Bank’s Flat Yet Stable Performance

Among the latest declarations, Axis Bank Ltd., a major private sector bank with a market cap of ₹4,13,347.57 crores, reported a flat financial performance for the December 2025 quarter. Despite the lack of growth, the bank’s financial metrics showed some bright spots. Net Interest Income (NII) reached a record high of ₹14,286.56 crores, while interest earned also peaked at ₹32,274.40 crores. Profit Before Depreciation, Interest and Taxes (PBDIT) stood at its highest level of ₹4,650.04 crores.

Axis Bank’s mojo score improved significantly from -7 three months ago to +2, reflecting a mild bullish sentiment among investors. The bank’s recent upgrade from a bullish to mildly bullish stance on 23 January 2026 at ₹1,260.10 per share indicates cautious optimism about its near-term prospects amid a challenging macroeconomic environment.

Upcoming Earnings to Watch

Market participants are eagerly awaiting results from several heavyweight companies scheduled for release on 28 January 2026. These include Bharat Electronics Ltd, Larsen & Toubro Ltd., and TVS Motor Company Ltd. Their performance will be critical in shaping market sentiment and providing further clarity on sectoral trends heading into the new fiscal year.

Aggregate Profit Growth and Market Implications

The aggregate profit growth for the quarter remains modest but positive, supported primarily by mid and small cap companies. The large cap segment’s subdued results highlight ongoing challenges such as margin pressures, input cost inflation, and regulatory scrutiny. However, the improving trend in positive results quarter-on-quarter suggests that corporate India is gradually adapting to the evolving economic landscape.

Investors should note the divergence in performance across market capitalisations and sectors, which underscores the importance of selective stock picking. Mid caps and small caps currently offer better earnings momentum, but they also carry higher volatility and risk. Large caps, while slower to recover, provide stability and defensive qualities in uncertain times.

Overall, the December 2025 earnings season reflects a cautious but improving corporate earnings environment, with pockets of strength that could drive market rallies if sustained in coming quarters.

Strategic Insights for Investors

Given the mixed results, investors are advised to focus on companies with strong earnings quality, robust cash flows, and clear growth drivers. Sectors such as Pharmaceuticals, Capital Markets, and select NBFCs have demonstrated resilience and growth potential. Meanwhile, financial institutions like Axis Bank, despite flat quarters, maintain solid fundamentals that could benefit from a normalising credit cycle.

Monitoring upcoming results from key industrial and technology players will be essential to gauge the broader economic recovery and investment climate. Diversification across market caps and sectors remains a prudent approach amid ongoing global uncertainties.

Conclusion

The December 2025 quarter earnings season has delivered a cautiously optimistic narrative. With 54.0% of companies reporting positive results, up from 43.0% in the previous quarter, the trend points to gradual improvement. Mid and small caps are leading the charge, while large caps face headwinds. Standout performers in Pharmaceuticals, Capital Markets, and NBFCs highlight areas of opportunity. Investors should remain selective and attentive to upcoming results from major corporates to navigate the evolving market landscape effectively.

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