Quarterly Earnings Trends and Positive Result Proportions

The December quarter saw 48.0% of companies reporting positive earnings, up from 42.0% in September 2025 and 40.0% in June 2025, signalling a gradual improvement in corporate profitability. However, this figure remains slightly below the 44.0% recorded in March 2025, indicating that the recovery is uneven and still fragile.

Breaking down by market capitalisation, mid-cap companies led the pack with 55.0% reporting positive results, followed by small caps at 49.0%. Large caps lagged significantly, with only 36.0% of companies posting positive earnings. This divergence suggests that mid and small caps are currently better positioned to capitalise on growth opportunities or have managed cost structures more effectively amid challenging conditions.

Sectoral and Market Cap Highlights

Among large caps, TVS Motor Co. stood out with strong earnings in the automobile sector, benefiting from robust domestic demand and improved export volumes. The company’s ability to navigate supply chain constraints and maintain margin discipline was evident in its quarterly performance.

In the mid-cap space, GE Vernova T&D from the heavy electrical equipment sector delivered impressive results, supported by increased infrastructure spending and government initiatives to bolster power transmission networks. This sectoral tailwind has helped GE Vernova T&D improve both top-line growth and profitability metrics.

Small caps also showcased notable performers, with Mahindra Life in realty and Cupid in FMCG sectors posting strong earnings growth. Mahindra Life’s results reflect a revival in real estate demand and improved sales velocity, while Cupid’s FMCG segment benefited from steady volume growth and cost optimisation.

Exceptional Performers and Micro Cap Spotlight

Among micro caps, String Metaverse from the paper, forest, and jute products sector emerged as the top performer overall. The company’s niche positioning and operational efficiencies have translated into superior earnings growth, making it a standout in a generally volatile segment.

Spotlight on Aether Industries Ltd’s Outstanding Quarter

Aether Industries Ltd, a specialty chemicals company with a market cap of ₹13,339.4 crores, delivered an outstanding performance in the December 2025 quarter. The company’s mojo score improved from 30 to 34 over the past three months, reflecting enhanced financial strength and operational efficiency.

Key highlights include net sales reaching a record ₹317.12 crores, marking a 27.3% growth compared to the previous four-quarter average. Operating profit to net sales ratio surged to 34.87%, the highest recorded, while PBDIT stood at ₹110.59 crores. The company’s PBT less other income rose by 47.8% to ₹89.40 crores, signalling strong core profitability.

Further, Aether’s PAT of ₹66.21 crores grew 30.6% over the prior four-quarter average, with earnings per share hitting a peak of ₹4.86. Operational efficiency metrics also improved, with inventory turnover ratio at 2.14 times and debtors turnover ratio at 3.24 times, underscoring effective working capital management.

Upcoming Earnings to Watch

Investors will be closely monitoring results from heavyweight companies scheduled to report on 5 February 2026, including Power Finance Corporation Ltd, Tata Motors Passenger Vehicles Ltd, and Bharti Airtel Ltd. These companies operate in critical sectors such as finance, automotive, and telecommunications, and their earnings will provide further clarity on sectoral momentum and broader economic trends.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 1149 companies reporting this quarter remains moderate, with pockets of strength in mid and small caps offset by subdued large-cap earnings. The improving trend in positive results from 40.0% in June 2025 to 48.0% in December 2025 suggests a tentative recovery, but the market continues to face headwinds from inflationary pressures, global uncertainties, and sector-specific challenges.

Sectoral patterns reveal that capital goods, specialty chemicals, and realty sectors are showing resilience, while consumer discretionary and large industrials are experiencing mixed outcomes. This divergence highlights the importance of selective stock picking and sectoral allocation in portfolios.

Market participants should weigh the improving earnings momentum against valuation levels and macroeconomic risks. The mid-cap segment’s outperformance may attract increased investor interest, but volatility remains a concern given the uneven recovery across sectors and market caps.

Conclusion: Navigating a Mixed Earnings Environment

The December 2025 quarter earnings season underscores a market in transition. While the overall proportion of companies reporting positive results has improved, the disparity between large caps and smaller companies points to ongoing structural and cyclical challenges. Investors are advised to focus on companies demonstrating consistent earnings growth, operational efficiency, and strong balance sheets.

With key results from major corporates imminent, the coming weeks will be critical in shaping market sentiment and investment strategies. Staying informed on sectoral trends and individual company fundamentals remains paramount in this evolving landscape.

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