Quarterly Earnings Trends: A Gradual Improvement

The December 2025 quarter saw 50.0% of companies reporting positive results, marking a notable improvement from the preceding quarters where positive results hovered between 40.0% and 44.0%. Specifically, the September 2025 quarter had 43.0% positive results, June 2025 stood at 40.0%, and March 2025 recorded 44.0%. This upward trend suggests a gradual recovery in corporate earnings momentum as companies navigate a challenging macroeconomic environment.

However, the overall 50% positivity rate indicates a market still grappling with uneven demand and cost pressures, with half the companies either missing estimates or reporting flat to negative growth. Investors should remain cautious, as the earnings landscape remains bifurcated.

Market Capitalisation Segmentation: Mid and Small Caps Lead

Breaking down the results by market capitalisation reveals a stark contrast in performance. Large caps reported only 35.0% positive results, significantly lagging behind mid caps and small caps, which posted 53.0% and 52.0% positive results respectively. This divergence highlights the resilience of mid and small cap companies, which may be benefiting from niche market positions, agility in cost management, or exposure to faster-growing sectors.

Large caps, often more exposed to global headwinds and regulatory challenges, appear to be under pressure, reflecting cautious investor sentiment towards blue-chip stocks in the current environment.

Sectoral Standouts: Leaders Across Market Caps

Among large caps, TVS Motor Co. emerged as a top performer in the automobile sector, demonstrating robust sales growth and margin expansion despite supply chain constraints. The company’s ability to sustain demand in a competitive market underscores its operational strength and brand loyalty.

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 supporting power transmission and distribution. The company’s order book growth and margin improvement were key drivers behind its positive earnings surprise.

Small caps also showcased notable performers, with Indo Thai Securities in the capital markets sector reporting solid profit growth, reflecting increased market activity and higher brokerage income. The company’s strategic focus on retail client acquisition and digital platforms has paid dividends in the quarter.

Exceptional Performers Among Micro and Small Caps

Among the micro caps, String Metaverse in the paper, forest and jute products sector stood out with impressive earnings growth, driven by cost efficiencies and rising demand for eco-friendly packaging solutions. This niche positioning has allowed the company to capitalise on sustainability trends.

Small cap companies Cupid Ltd. and Indo Thai Securities were among the top overall results. Cupid Ltd., operating in the FMCG sector, reported an outstanding quarter with net sales reaching ₹93.50 crores, a 51.4% increase over its previous four-quarter average. Profit before tax (excluding other income) surged 108.6% to ₹32.38 crores, while profit after tax grew 112.7% to ₹32.83 crores. Operating profit to net sales ratio hit a record 36.68%, and earnings per share reached ₹1.22, marking the highest levels in recent quarters.

Recent Activity and Market Implications

In the last 24 hours alone, 252 companies declared results, with Cupid Ltd. leading the charge in terms of financial performance. The company’s recent mild bullish upgrade from a previously bullish stance on 27 January 2026 at ₹397.60 reflects growing investor confidence. Cupid’s financial score improved markedly from 27 to 38 over the past three months, signalling enhanced earnings quality and operational efficiency.

Such strong mid and small cap earnings performances may attract increased investor interest, especially as large caps continue to face headwinds. However, the overall market remains cautious, with many companies still contending with inflationary pressures, input cost volatility and subdued demand in certain sectors.

Upcoming Earnings to Watch

Investors should keep an eye on key upcoming results scheduled for 31 January 2026, including those of Sun Pharmaceutical Industries Ltd, GAIL (India) Ltd, and IDFC First Bank Ltd. These companies represent significant sectors such as pharmaceuticals, energy, and banking, and their quarterly performance will provide further clarity on sectoral trends and broader economic recovery prospects.

Aggregate Profit Growth and Market Outlook

While aggregate profit growth remains uneven, the improving proportion of positive results quarter-on-quarter suggests a tentative recovery phase. Mid and small caps appear to be the primary beneficiaries of this trend, supported by sector-specific tailwinds and operational agility. Large caps, meanwhile, require more robust catalysts to regain investor favour.

Market participants should continue to analyse earnings quality, margin sustainability and sectoral dynamics carefully. Selective stock picking, favouring companies with strong fundamentals and clear growth visibility, remains the prudent approach in this evolving earnings landscape.

Conclusion

The December 2025 earnings season underscores a market in transition. With half the companies reporting positive results and mid and small caps outperforming their larger counterparts, investors are presented with both opportunities and challenges. Sector leaders such as TVS Motor Co., GE Vernova T&D, and Cupid Ltd. highlight pockets of strength, while the broader market awaits clearer signals from upcoming earnings and macroeconomic developments.

As the market digests these results, a focus on quality earnings growth and valuation discipline will be key to navigating the months ahead.

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