Quarterly Earnings Trends: A Gradual Improvement

The latest quarter saw 46.0% of companies reporting positive earnings, a slight improvement from 42.0% in September 2025 and 40.0% in June 2025, though marginally below the 45.0% recorded in March 2025. This oscillation suggests a cautious recovery phase, with companies navigating inflationary pressures, supply chain disruptions, and fluctuating demand.

Profit growth among the positive performers has been encouraging in pockets, particularly in mid and small cap segments, which have shown resilience amid broader market volatility. However, large caps have lagged somewhat, reflecting their exposure to global headwinds and sectoral cyclicality.

Market Capitalisation Breakdown: Mid Caps Lead the Charge

Analysing results by market capitalisation reveals a clear divergence in earnings performance. Mid cap companies have outperformed peers with 52.0% reporting positive results, signalling robust operational execution and growth prospects. Small caps follow closely at 46.0%, while large caps trail at 38.0%, indicating a more cautious outlook among heavyweight corporates.

This pattern underscores the growing investor interest in mid-sized firms that are often more agile and focused on niche markets, enabling them to capitalise on emerging opportunities despite macroeconomic uncertainties.

Sectoral Highlights: Automobiles and E-Commerce Shine

Among large caps, TVS Motor Co. stood out with strong quarterly performance in the automobile sector, benefiting from sustained demand in two and three-wheeler segments and improved supply chain management. The company’s ability to navigate input cost pressures while maintaining volume growth has been a key driver of its positive results.

In the mid cap space, FSN E-Commerce delivered impressive earnings, reflecting the continued expansion of digital retail and consumer adoption of online platforms. The company’s strategic investments in technology and logistics have translated into higher sales and margin improvement, positioning it favourably in the competitive e-retail landscape.

Small caps also featured notable performers such as Cupid in the FMCG sector, which reported solid volume growth and margin expansion, supported by strong brand equity and distribution reach.

Micro Cap Standouts and Recent Movers

Micro cap companies have also made headlines with exceptional quarterly results. String Metaverse, operating in the Paper, Forest & Jute Products sector, and Trescon from Realty, have delivered top-line growth and margin expansion, signalling potential turnaround stories and niche market leadership.

Among small caps, Cupid continues to impress with consistent earnings growth, driven by strong consumer demand and efficient cost management.

Spotlight on HBL Engineering Ltd: A Strong Quarter in Auto Components

In the last 24 hours, HBL Engineering Ltd, a mid-sized player in Auto Components & Equipments, declared robust results for the December 2025 quarter. The company reported net sales of ₹874.04 crores, marking a 27.1% increase compared to its previous four-quarter average. Profit before tax (excluding other income) rose 36.1% to ₹287.52 crores, while net profit after tax surged 33.9% to ₹221.31 crores.

Despite a recent decline in its financial score from 38 to 30 over the past three months, HBL Engineering’s operational performance remains outstanding, reflecting strong demand and efficient cost controls. The stock turned mildly bullish on 01 February 2026 at ₹760.65, signalling renewed investor confidence.

Upcoming Earnings to Watch

Market participants will closely monitor results from key pharmaceutical and industrial companies scheduled to report on 09 February 2026. These include Zydus Lifesciences Ltd, Linde India Ltd., and Aurobindo Pharma Ltd. Their performance will provide further insight into sectoral trends and broader economic conditions.

Aggregate Profit Growth and Market Implications

While the proportion of companies reporting positive earnings remains below 50%, the gradual improvement over recent quarters suggests a tentative recovery in corporate profitability. Mid and small caps are leading this resurgence, supported by domestic demand and sector-specific tailwinds.

Large caps’ subdued performance reflects ongoing global uncertainties, including inflationary pressures and geopolitical risks, which continue to weigh on export-oriented and commodity-linked sectors. Investors may need to adopt a selective approach, favouring companies with strong balance sheets, pricing power, and growth visibility.

Overall, the December 2025 earnings season highlights a market in transition, balancing cautious optimism with the need for vigilance amid evolving macroeconomic challenges.

Strategic Takeaways for Investors

Investors should consider the following insights from the current earnings cycle:

• Mid cap companies, particularly in automobiles and e-commerce, offer attractive growth potential and operational resilience.
• Small caps with strong brand presence and niche market focus continue to deliver solid earnings momentum.
• Large caps require careful stock selection, favouring those with diversified revenue streams and robust cost management.
• Monitoring upcoming results from pharmaceutical and industrial sectors will be crucial for assessing broader economic health.

These factors will be instrumental in shaping portfolio strategies as the market navigates the first half of 2026.

Unlock special upgrade rates for a limited period. Start Saving Now →