Quarterly Earnings Trends: A Gradual Improvement

The latest quarter saw exactly half of the companies reporting positive earnings, a notable increase from 43.0% in September 2025 and 40.0% in June 2025. The March 2025 quarter had a slightly better showing at 44.0%, but the December quarter’s 50.0% positive result ratio indicates a gradual improvement in corporate profitability and operational resilience.

This uptick in positive results suggests that companies are beginning to navigate the challenges posed by inflationary pressures, supply chain disruptions, and geopolitical uncertainties more effectively. However, the fact that only half of the companies reported positive results also underscores the ongoing headwinds faced by many sectors.

Market Capitalisation Breakdown: Mid and Small Caps Lead

Analysing results by market capitalisation reveals a stark contrast in performance. Large-cap companies reported a relatively low positive result ratio of 36.0%, indicating that many blue-chip firms continue to face margin pressures and demand softness. In contrast, mid-cap and small-cap stocks outperformed, with 53.0% and 52.0% respectively reporting positive earnings.

This divergence may reflect the agility and niche market focus of mid and small caps, enabling them to capitalise on emerging opportunities and cost efficiencies. Large caps, often more exposed to global economic cycles and commodity price fluctuations, appear to be in a consolidation phase.

Sectoral Standouts: Automobiles, Heavy Electricals, and FMCG Shine

Among the large-cap companies, TVS Motor Co. emerged as a top performer in the automobile sector, demonstrating robust volume growth and margin expansion despite the challenging macroeconomic backdrop. The company’s ability to innovate and expand its product portfolio has helped it sustain investor confidence.

In the mid-cap space, GE Vernova T&D from the heavy electrical equipment sector delivered strong results, benefiting from increased infrastructure spending and government initiatives to bolster power transmission networks. The company’s order book growth and operational efficiencies contributed to its positive earnings surprise.

Small-cap stocks also featured prominently, with Cupid Ltd. from the FMCG sector posting outstanding financial performance. Cupid’s December quarter results were marked by a 51.4% growth in net sales to ₹93.50 crores, a 108.6% increase in profit before tax (excluding other income) to ₹32.38 crores, and a 112.7% rise in profit after tax to ₹32.83 crores compared to the previous four-quarter average. The company’s operating profit margin to net sales reached a high of 36.68%, underscoring strong operational leverage.

Micro and Small Caps: Emerging Leaders

Beyond the traditional market cap segments, micro-cap stocks have also delivered noteworthy performances. String Metaverse, operating in the paper, forest, and jute products sector, topped the overall results list, reflecting strong demand and cost management. Similarly, small-cap companies like Indo Thai Securities in the capital markets sector have shown resilience amid volatile market conditions.

The strong showing from these smaller companies highlights the potential for alpha generation in less-followed segments of the market, where nimble management and focused strategies can yield superior earnings growth.

Cupid Ltd: A Case Study in Earnings Excellence

Cupid Ltd’s recent upgrade from a Bullish to Mildly Bullish stance on 27 January 2026 at ₹397.60 reflects the market’s recognition of its stellar quarterly performance. The company’s earnings per share (EPS) for the quarter reached ₹1.22, the highest in recent history, supported by record net sales and operating profits.

The company’s PBDIT (profit before depreciation, interest, and tax) stood at ₹34.30 crores, also a record high, indicating strong operational efficiency. This performance is particularly impressive given the inflationary pressures and competitive challenges in the FMCG sector.

Upcoming Earnings to Watch

Investors will be closely monitoring the results of several heavyweight companies scheduled to report soon, including Sun Pharmaceutical Industries Ltd, GAIL (India) Ltd, and IDFC First Bank Ltd on 31 January 2026. These companies operate in sectors critical to the broader economy, and their earnings will provide further clarity on the sustainability of the current earnings momentum.

Aggregate Profit Growth and Market Implications

While the aggregate profit growth across the 738 companies is not explicitly quantified in the data, the improvement in the proportion of positive results and the standout performances from mid and small caps suggest a cautiously optimistic earnings environment. The mixed results from large caps, however, indicate that investors should remain selective and focus on companies with strong fundamentals and growth visibility.

Sectoral disparities and market cap-based performance differences underline the importance of diversification and active portfolio management in the current phase. Companies with robust balance sheets, innovative product offerings, and exposure to growth sectors are likely to outperform in the coming quarters.

Conclusion: Navigating a Mixed Earnings Landscape

The December 2025 quarter earnings season paints a picture of gradual recovery tempered by ongoing challenges. With half of the companies reporting positive results, the market is witnessing a tentative improvement in corporate profitability. Mid and small caps are leading the charge, buoyed by sectoral tailwinds and operational agility, while large caps remain under pressure.

Investors should focus on quality earnings growth and remain vigilant about sectoral trends and macroeconomic developments. The upcoming results from key large-cap companies will be critical in shaping market sentiment and guiding investment strategies for the first half of 2026.

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