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 53.0% in December 2025. This marks a notable recovery from the subdued performance seen earlier in the year, reflecting a gradual stabilisation of corporate earnings amid macroeconomic headwinds.

However, this improvement is not uniform across market capitalisation segments. Large caps have lagged with only 34.0% of companies posting positive results, while mid caps and small caps have fared better at 60.0% and 55.0% respectively. This divergence suggests that mid and small cap companies are currently benefiting from niche sectoral tailwinds or operational agility, whereas large caps face more pronounced challenges in sustaining growth momentum.

Sectoral and Market Cap Leaders

Among large caps, Piramal Finance stood out with robust earnings, although the sector classification remains unspecified. Mid cap performers were led by Laurus Labs, a key player in Pharmaceuticals & Biotechnology, which continues to capitalise on strong demand for healthcare products and contract manufacturing services. Small caps saw Indo Thai Securities, operating in the Capital Markets sector, deliver impressive results, reflecting increased market activity and investor participation.

Micro caps also showcased some exceptional performers, with String Metaverse (Paper, Forest & Jute Products) and Sera Investments (Non-Banking Financial Company) topping the charts. These companies have demonstrated strong operational execution and niche market positioning, contributing to their standout quarterly performances.

Raymond Realty Ltd: A Case Study in Earnings Excellence

Among the 56 companies that declared results in the last 24 hours, Raymond Realty Ltd, with a market cap of ₹2,818.07 crores in the Realty sector, delivered a stellar quarter. The company reported net sales of ₹757.55 crores, marking a remarkable 136.7% growth compared to its previous four-quarter average. Operating profit to interest ratio reached a peak of 5.31 times, signalling strong operational efficiency and prudent financial management.

Profit before tax (excluding other income) surged by 309.5% to ₹68.78 crores, while profit after tax soared 225.4% to ₹66.79 crores, both representing record highs for the company. Additionally, PBDIT stood at ₹91.45 crores, the highest in recent history, underscoring the company’s robust earnings quality and margin expansion.

Aggregate Profit Growth and Market Implications

The overall earnings season reflects a cautiously optimistic outlook for Indian equities. The rise in positive results to 53.0% in the December quarter is a meaningful improvement, yet the subdued performance among large caps indicates that broader economic challenges and sector-specific headwinds persist. Investors should note that mid and small caps are currently driving earnings growth, supported by sectors such as pharmaceuticals, capital markets, and select financial services.

Quality of earnings remains a key focus, with companies like Raymond Realty demonstrating not only top-line growth but also margin expansion and strong interest coverage ratios. Such metrics are critical in assessing sustainability amid rising input costs and tightening monetary conditions.

Upcoming Earnings to Watch

Market participants will closely monitor results from heavyweight companies scheduled to report shortly, including Vedanta Ltd, ITC Ltd, and REC Ltd on 29 January 2026. These companies operate in sectors that are sensitive to commodity cycles, consumer demand, and infrastructure spending, and their earnings will provide further clarity on the broader economic trajectory.

Outlook and Strategic Considerations

Given the current earnings landscape, investors may consider tilting portfolios towards mid and small cap stocks with demonstrated earnings resilience and sectoral tailwinds. The Pharmaceuticals & Biotechnology sector, exemplified by Laurus Labs, continues to offer growth opportunities amid global healthcare demand. Similarly, capital markets and NBFCs in the small and micro cap space have shown robust earnings momentum, reflecting increased financialisation and credit demand.

Conversely, large cap investors should remain selective, focusing on companies with strong balance sheets and proven ability to navigate macroeconomic uncertainties. The divergence in earnings performance across market caps underscores the importance of granular stock selection and sectoral analysis in the current environment.

Conclusion

The December 2025 quarter earnings season has delivered a mixed but improving picture for Indian equities. While the overall rise in positive results to 53.0% is encouraging, the disparity between large caps and smaller companies highlights ongoing challenges and opportunities. Investors are advised to adopt a discerning approach, favouring companies with strong earnings quality, sectoral advantages, and robust financial metrics as the market navigates a complex macroeconomic backdrop.

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