Quarterly Earnings Trends: A Gradual Upswing

The latest quarter saw 55.0% of companies delivering positive results, a marked increase from 43.0% in September 2025 and 40.0% in June 2025. This upward trajectory suggests that businesses are gradually navigating through macroeconomic headwinds, with improving operational efficiencies and stabilising demand contributing to better-than-expected earnings. The March 2025 quarter had recorded 45.0% positive results, underscoring the volatility experienced over the past year.

Sectoral performance remains uneven, with certain industries demonstrating resilience while others continue to face challenges. The aggregate profit growth for the quarter, while not uniformly robust, reflects pockets of strength particularly in mid and small cap segments.

Market Capitalisation Breakdown: Mid Caps Outperform

Analysing results by market capitalisation reveals a distinct pattern. Mid cap stocks led the charge with 61.0% reporting positive earnings, outperforming both small caps at 57.0% and large caps at a more subdued 37.0%. This divergence highlights the relative agility and growth potential of mid-sized companies in the current economic environment, often benefiting from niche market positions and operational flexibility.

Large caps, despite their scale and resource advantages, have faced headwinds from global uncertainties and sector-specific pressures, resulting in a lower proportion of positive results. Small caps, while generally more volatile, have maintained a respectable performance, buoyed by select sectors such as capital markets and non-banking financial companies.

Top Performers by Market Cap and Sector

Among large caps, Piramal Finance emerged as a standout performer, delivering robust earnings despite sectoral uncertainties. The company’s ability to sustain profitability amidst a challenging credit environment underscores its operational strength and prudent risk management.

In the mid cap space, Laurus Labs, operating within Pharmaceuticals & Biotechnology, posted impressive results, reflecting strong demand for its product portfolio and successful cost control measures. This performance aligns with the broader healthcare sector’s resilience amid ongoing global health concerns.

Small caps saw Indo Thai Securities from the Capital Markets sector shine, benefiting from increased market activity and favourable trading volumes. Additionally, micro caps such as String Metaverse in Paper, Forest & Jute Products and Sera Investments in the Non-Banking Financial Company (NBFC) segment delivered top results, highlighting the diverse pockets of growth within smaller market segments.

Recent Highlights: Axis Bank’s Stable Quarter

In the last 24 hours, two companies declared results, with Axis Bank Ltd. being the most notable. The private sector bank, with a market size of ₹4,00,461 crores, reported a flat financial performance for the December 2025 quarter. Despite the lack of significant growth, the bank’s score improved from -7 to 2 over the past three months, signalling a mild bullish sentiment among investors.

Axis Bank recorded its highest quarterly Net Interest Income (NII) at ₹14,286.56 crores and Interest Earned at ₹32,274.40 crores, alongside a peak Profit Before Depreciation, Interest and Taxes (PBDIT) of ₹4,650.04 crores. These figures indicate stable core operations, although growth remains subdued amid competitive pressures and cautious lending environments.

Upcoming Earnings to Watch

Market participants are closely monitoring the forthcoming results of Bharat Electronics Ltd, Larsen & Toubro Ltd, and TVS Motor Company Ltd, all scheduled to announce on 28 January 2026. These companies represent key sectors including defence electronics, engineering and construction, and automotive manufacturing, respectively, and their earnings will provide further insight into the broader economic recovery trajectory.

Sectoral Patterns and Investor Implications

The December quarter results reinforce the notion that mid cap companies currently offer the most compelling earnings growth opportunities, supported by favourable sectoral dynamics and operational agility. Pharmaceuticals, capital markets, and select NBFCs continue to outperform, driven by structural demand and improving market conditions.

Conversely, large caps face a more challenging environment, with global macroeconomic uncertainties and sector-specific headwinds tempering earnings growth. Investors may consider a balanced approach, favouring mid and small caps with strong fundamentals while remaining cautious on large cap valuations until clearer signs of recovery emerge.

Overall, the improving trend in positive earnings surprises from 40.0% in June 2025 to 55.0% in December 2025 suggests a gradual but steady recovery in corporate profitability, offering a cautiously optimistic outlook for the Indian equity markets in the near term.

Conclusion: Navigating a Mixed Earnings Landscape

The December 2025 quarterly earnings season paints a nuanced picture of the Indian corporate sector’s health. While mid and small caps demonstrate encouraging growth and resilience, large caps remain under pressure, reflecting broader economic uncertainties. Investors should focus on quality companies with sustainable earnings growth and sectoral tailwinds to capitalise on the evolving market dynamics.

With key results from heavyweight companies imminent, the market’s direction in the coming weeks will hinge on these outcomes, potentially setting the tone for the first quarter of 2026.

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