Quarterly Earnings Trends: A Gradual Improvement

The proportion of companies reporting positive results has steadily improved over the last four quarters, rising from 40.0% in June 2025 to 50.0% in December 2025. This marks a notable recovery from the subdued performance seen earlier in the year, reflecting a gradual stabilisation in earnings momentum amid ongoing macroeconomic challenges.

Specifically, the positive result ratio was 44.0% in March 2025, 43.0% in September 2025, and has now reached an even 50.0% in the latest quarter. This incremental improvement suggests that companies are beginning to navigate cost pressures and demand fluctuations more effectively, although the overall earnings environment remains cautious.

Market Capitalisation Segmentation: Mid and Small Caps Lead

Breaking down the results by market capitalisation reveals a stark contrast in earnings performance. Large-cap companies reported a positive result ratio of just 35.0%, significantly lagging behind mid-cap and small-cap peers, which posted 54.0% and 52.0% respectively. This divergence highlights the resilience and growth potential of mid and small caps, which appear to be benefiting from niche market opportunities and operational agility.

Large caps, often more exposed to global economic headwinds and regulatory scrutiny, have faced tougher comparatives and margin pressures. Conversely, mid and small caps have leveraged sectoral tailwinds and domestic demand recovery to post stronger earnings beats.

Sectoral Standouts: Leaders Across Market Caps

Among large caps, TVS Motor Co. in the automobile sector has delivered one of the top results, reflecting robust volume growth and margin expansion driven by new product launches and cost optimisation. The company’s ability to sustain demand in a competitive environment has been a key factor in its standout performance.

In the mid-cap space, GE Vernova T&D from the heavy electrical equipment sector has impressed investors with strong order inflows and execution efficiencies, translating into solid revenue and profit growth. The company’s focus on transmission and distribution infrastructure aligns well with government initiatives, supporting its earnings trajectory.

Among small caps, Indo Thai Securities in the capital markets sector has emerged as a top performer, benefiting from increased market activity and higher brokerage income. The firm’s strategic positioning in a recovering financial services environment has underpinned its earnings strength.

Micro Cap Leaders: Exceptional Performers

Micro-cap companies have also showcased remarkable results, with String Metaverse (Paper, Forest & Jute Products), Indo Thai Securities (Capital Markets), and STEL Holdings (Non-Banking Financial Company) topping the charts. These companies have demonstrated exceptional growth rates and operational improvements, often outpacing their larger counterparts.

Notably, STEL Holdings Ltd. reported outstanding financial performance for the December 2025 quarter. The company’s net sales surged by 203.0% to ₹17.20 crores compared to its previous four-quarter average, while profit before tax (excluding other income) rose by 199.8% to ₹17.05 crores. PAT grew by 194.8% to ₹12.58 crores, marking the highest quarterly figures in its history. Earnings per share (EPS) also reached a peak of ₹6.81, reflecting strong operational leverage and improved business fundamentals.

Quality and Momentum: Ratings and Market Sentiment

STEL Holdings’ recent upgrade from a sideways to a mildly bullish stance on 29 January 2026 at ₹481.00 reflects growing investor confidence. Its MarketsMOJO score improved significantly from 13 to 36 over the past three months, signalling enhanced financial health and momentum. This upgrade underscores the company’s turnaround and strong earnings delivery, which have been well received by the market.

Such upgrades and positive ratings are crucial indicators for investors seeking quality growth stocks amid a volatile macroeconomic backdrop. The ability of companies like STEL Holdings to deliver consistent earnings growth and improve operational metrics is a key differentiator in the current environment.

Upcoming Results to Watch

Market participants will closely monitor the earnings announcements of heavyweight companies scheduled for 30 January 2026, including Jindal Steel Ltd., Nestle India Ltd., and NTPC Ltd.. These results are expected to provide further clarity on sectoral trends and corporate earnings momentum heading into the new fiscal year.

Aggregate Profit Growth and Market Implications

While the aggregate profit growth across the 675 companies is uneven, the improving trend in positive results and standout performances in mid and small caps suggest a cautiously optimistic outlook. Investors should remain selective, favouring companies with strong earnings quality, robust balance sheets, and clear growth catalysts.

The divergence between large caps and smaller companies also highlights the importance of portfolio diversification across market capitalisation segments to capture emerging opportunities while managing risk.

Conclusion: Navigating a Nuanced Earnings Season

The December 2025 quarter earnings season reflects a complex but improving corporate earnings landscape. With half of the companies reporting positive results, and mid and small caps leading the charge, investors have reason to be cautiously optimistic. Sectoral leaders in automobiles, heavy electrical equipment, and capital markets provide pockets of strength, while micro-cap performers like STEL Holdings demonstrate the potential for significant earnings acceleration.

As the market awaits key results from major corporates later this week, the focus will remain on earnings quality, margin sustainability, and growth visibility. Strategic stock selection and active monitoring of earnings trends will be essential for navigating the evolving market environment.

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