Quarterly Earnings Trends Show Gradual Improvement

The latest quarter saw exactly half of the companies reporting positive earnings, marking a notable improvement from the 43.0% in September 2025 and 40.0% in June 2025. This upward trend suggests a gradual recovery in corporate profitability after a challenging year. However, the March 2025 quarter had a slightly higher positive result proportion at 44.0%, indicating some volatility in earnings momentum.

Despite the overall improvement, the distribution of positive results varies significantly by market capitalisation. Large-cap companies lag behind with only 34.0% reporting positive earnings, whereas mid-cap and small-cap firms fared better with 53.0% and 52.0% respectively. This divergence highlights the resilience of smaller companies amid macroeconomic headwinds that continue to weigh on larger, more diversified enterprises.

Sectoral Standouts and Top Performers

Among large caps, TVS Motor Company emerged as a clear outperformer in the automobile sector, benefiting from robust demand in two and three-wheeler segments and improved operational efficiencies. The company’s earnings beat expectations, supported by a favourable product mix and cost control measures.

In the mid-cap space, GE Vernova T&D from the heavy electrical equipment sector delivered strong results, driven by increased order inflows and execution momentum. The company’s focus on transmission and distribution infrastructure projects has positioned it well to capitalise on government spending in power sector modernisation.

Among small caps, Cupid Ltd. in the FMCG sector posted an outstanding quarter, with net sales reaching a record ₹93.50 crores, up 51.4% compared to its previous four-quarter average. Profit before tax (excluding other income) surged 108.6% to ₹32.38 crores, while net profit after tax grew 112.7% to ₹32.83 crores. Operating profit margins expanded to 36.68%, reflecting strong pricing power and cost management. Earnings per share hit a high of ₹1.22, underscoring the company’s robust profitability trajectory.

Micro Cap and Small Cap Leaders Highlight Diverse Opportunities

Beyond the mainstream large and mid-cap segments, micro-cap companies have also showcased impressive performances. String Metaverse, operating in the paper, forest and jute products sector, topped the charts among micro caps, signalling niche growth opportunities in traditional industries adapting to new market realities.

Other notable small-cap performers include Indo Thai Securities in the capital markets sector, which has benefited from increased market activity and improved brokerage revenues. These companies’ strong results reflect the potential for alpha generation in less-followed segments of the market.

Aggregate Profit Growth and Market Implications

Aggregate profit growth across the 735 companies has been buoyed by the mid and small-cap segments, which have shown double-digit growth in key profitability metrics. However, the subdued performance of large caps, which constitute a significant portion of the market capitalisation, has tempered overall market enthusiasm.

Investors should note that the divergence in earnings quality and growth rates across market caps and sectors suggests a selective approach to portfolio construction. Companies with strong operational leverage, pricing power, and sectoral tailwinds are likely to outperform in the near term.

Looking ahead, several heavyweight companies are scheduled to report results imminently, including Sun Pharmaceutical Industries Ltd, GAIL (India) Ltd, and IDFC First Bank Ltd on 31 January 2026. Their results will be closely watched for indications of sectoral trends and broader economic recovery.

Investor Takeaways and Strategic Considerations

The December quarter earnings season underscores the importance of granular analysis beyond headline numbers. While the headline 50.0% positive result ratio is encouraging, the underlying disparities between market cap segments and sectors highlight the uneven nature of the recovery.

Mid and small caps continue to offer pockets of strong growth and profitability, particularly in consumer discretionary, FMCG, and specialised industrial sectors. Conversely, large caps face challenges from margin pressures, input cost inflation, and global economic uncertainties.

Investors should favour companies demonstrating consistent earnings upgrades, margin expansion, and robust cash flow generation. Quality metrics such as operating profit to net sales ratio, return on equity, and earnings per share growth remain critical in identifying sustainable performers.

Conclusion

The Dec-2025 quarterly results season paints a nuanced picture of India’s corporate earnings landscape. While the overall improvement in positive results to 50.0% signals recovery, the divergence across market capitalisation and sectors calls for a discerning investment approach. Companies like Cupid Ltd., TVS Motor Co., and GE Vernova T&D exemplify the potential for earnings growth and margin improvement in their respective segments. As the market awaits results from major upcoming companies, investors are advised to focus on fundamentals and sectoral dynamics to navigate the evolving earnings environment effectively.

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