Quarterly Earnings Trends: Gradual Improvement in Positivity

The latest quarter saw exactly half of the companies reporting earnings beats or positive results, a notable increase from the 43.0% recorded in September 2025 and the 40.0% in June 2025. This upward trajectory suggests a gradual stabilisation in corporate profitability after a volatile year. However, the March 2025 quarter had a slightly higher positivity rate of 44.0%, indicating that the December quarter’s 50.0% is a meaningful improvement but still reflects a cautious market environment.

Sectoral and market cap-wise analysis reveals divergent trends, with mid and small caps outperforming their large-cap counterparts in terms of positive earnings outcomes.

Market Capitalisation Breakdown: Mid and Small Caps Lead

Among the 751 companies, large caps reported a relatively modest 36.0% positive results, lagging behind mid caps at 53.0% and small caps at 52.0%. This disparity highlights the resilience and growth potential in the mid and small-cap segments, which have benefited from niche market opportunities and operational agility. Large caps, often more exposed to global economic headwinds and regulatory pressures, have faced tougher earnings comparisons and margin pressures.

Investors may find selective opportunities in mid and small caps, where earnings momentum appears stronger, but should remain cautious given the inherent volatility in these segments.

Top Performers by Market Cap and Sector

Among large caps, TVS Motor Company from the automobile sector stood out with robust earnings, reflecting sustained demand in the two-wheeler segment and operational efficiencies. The company’s performance underscores the resilience of the automobile sector despite supply chain challenges and inflationary pressures.

In the mid-cap space, GE Vernova T&D, operating in heavy electrical equipment, delivered strong results driven by increased order inflows and execution momentum. The company’s focus on transmission and distribution infrastructure aligns well with India’s ongoing power sector reforms and renewable energy integration.

Among small caps, Cupid Ltd. from the FMCG sector emerged as a star performer. The company reported its highest-ever quarterly net sales of ₹93.50 crores, with profit before tax (excluding other income) soaring 108.6% compared to its previous four-quarter average. Profit after tax grew even more impressively by 112.7%, reaching ₹32.83 crores. Operating profit margins also expanded to a record 36.68%, signalling strong operational leverage and effective cost management.

Other notable small-cap performers include Indo Thai Securities in the capital markets sector, and String Metaverse, a micro-cap player in paper, forest, and jute products, which topped overall results with exceptional growth metrics.

Sectoral Patterns: FMCG and Electrical Equipment Shine

The FMCG sector, exemplified by Cupid Ltd., continues to demonstrate resilience amid inflationary pressures and changing consumer preferences. Strong volume growth, product innovation, and premiumisation have helped companies in this space maintain healthy margins and expand market share.

Heavy electrical equipment companies like GE Vernova T&D are benefiting from government infrastructure spending and the energy transition, which are driving demand for modern transmission and distribution solutions. This sector’s earnings growth is expected to sustain as India accelerates its renewable energy capacity additions.

Conversely, large-cap companies, particularly in sectors exposed to global trade and commodity cycles, have faced margin pressures and muted earnings growth, reflecting the broader macroeconomic uncertainties.

Outlook and Upcoming Results

With 152 results declared in the last 24 hours alone, the earnings season remains active. Investors will closely watch upcoming results from heavyweight companies such as Sun Pharmaceutical Industries Ltd, GAIL (India) Ltd, and IDFC First Bank Ltd scheduled for 31 January 2026. These companies’ performances will provide further clarity on sectoral trends and the broader economic recovery trajectory.

Market participants should continue to monitor earnings quality, margin trends, and revenue growth to identify sustainable opportunities amid a mixed macroeconomic backdrop.

Investment Implications

The December quarter results highlight a bifurcated market where mid and small caps are outperforming large caps in earnings positivity. Investors seeking growth may consider selective exposure to mid and small-cap companies with strong fundamentals and sector tailwinds, such as FMCG and heavy electrical equipment.

However, caution is warranted given the ongoing global uncertainties, inflationary pressures, and potential policy shifts. Diversification and rigorous fundamental analysis remain key to navigating this earnings season effectively.

Summary

The Dec-2025 quarter earnings season reflects a cautious but improving corporate earnings environment. With 50.0% of companies reporting positive results, up from 43.0% in the prior quarter, the market is showing signs of stabilisation. Mid and small caps are leading the charge, supported by strong performances in FMCG and electrical equipment sectors. Large caps face headwinds but still offer pockets of opportunity. Upcoming results from major companies will be critical in shaping near-term market sentiment.

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