Quarterly Earnings Overview and Trend Analysis

The latest quarter saw 46.0% of companies reporting positive earnings, a modest improvement over the 44.0% recorded in September 2025 and 41.0% in June 2025, though slightly below the 47.0% positive results in March 2025. This oscillation suggests a market still grappling with macroeconomic headwinds and sector-specific challenges, despite pockets of resilience.

Aggregate profit growth remains uneven, with many companies facing margin pressures due to rising input costs and subdued demand in certain sectors. However, select industries such as petrochemicals and non-banking financial companies (NBFCs) have demonstrated robust earnings growth, signalling areas of strength within the broader market.

Market Capitalisation Segments: Divergent Earnings Outcomes

Breaking down the results by market cap reveals a clear disparity in earnings performance. Mid-cap companies led the pack with 53.0% reporting positive results, outperforming both small caps at 45.0% and large caps at 43.0%. This outperformance by mid-caps may reflect their greater agility and exposure to growth sectors such as e-commerce and specialised manufacturing.

Large caps, despite their size and market influence, have struggled comparatively, with less than half delivering positive earnings. This could be attributed to their significant exposure to cyclical sectors and global economic uncertainties impacting export-oriented businesses.

Sectoral Highlights and Top Performers

Among large caps, Muthoot Finance stood out with strong quarterly results, benefiting from sustained demand in the NBFC sector and prudent risk management. Its performance underscores the resilience of financial services companies with diversified portfolios and conservative lending practices.

In the mid-cap space, FSN E-Commerce delivered impressive earnings, capitalising on the continued expansion of digital retail and consumer adoption trends. This aligns with the broader e-retail sector’s recovery as consumer spending patterns normalise post-pandemic.

Small caps also showcased notable performers, with Quality Power El from the heavy electrical equipment sector reporting solid results, reflecting increased infrastructure spending and government initiatives supporting capital goods manufacturers.

Micro Cap and Small Cap Leaders

Micro cap stocks have also delivered standout performances in this quarter. Jindal Poly Inve, operating in the NBFC sector, and Trescon, from the realty sector, emerged as top performers, highlighting the potential for high returns in smaller, more nimble companies despite their higher risk profiles.

Additionally, Indo Thai Securities, a small cap player in the capital markets sector, reported strong earnings, benefiting from increased market activity and investor participation. These results reflect a broader trend of selective strength in niche sectors within the smaller market capitalisation universe.

Recent Developments: Rain Industries Ltd

Among the latest companies to declare results, Rain Industries Ltd, a petrochemicals giant with a market cap of ₹4,999.78 crores, reported a significant turnaround in its quarterly performance. The company’s profit after tax (PAT) for the December 2025 quarter surged by 140.8% to ₹13.51 crores compared to its previous four-quarter average, signalling a strong recovery in its core operations.

Notably, Rain Industries’ market sentiment shifted from mildly bullish to bullish on 17 February 2026 at a share price of ₹150.00, reflecting investor confidence in its improving fundamentals despite a recent decline in its financial score from 17 to 11 over the past three months. This dichotomy suggests that while short-term metrics have softened, the underlying business momentum remains positive.

Upcoming Earnings to Watch

Looking ahead, investors will be closely monitoring the results of Fractal Analytics Ltd, scheduled for release on 5 March 2026. As a key player in the analytics and data services sector, its performance will provide insights into the technology and digital transformation trends shaping corporate India.

Implications for Investors

The December quarter earnings season underscores the importance of selective stock picking and sectoral analysis in the current market environment. While aggregate positive results have improved marginally, the uneven distribution across market caps and sectors calls for a discerning approach.

Mid-cap companies appear to offer a more favourable risk-reward profile at present, supported by growth-oriented sectors such as e-commerce and specialised manufacturing. Conversely, large caps require careful scrutiny given their mixed results and exposure to cyclical pressures.

Investors should also consider the quality of earnings and sustainability of profit growth, particularly in smaller companies where volatility can be higher. The strong performances of select micro and small caps highlight opportunities but also necessitate thorough due diligence.

Sectoral Outlook and Market Sentiment

The NBFC sector continues to demonstrate resilience, with companies like Muthoot Finance and Jindal Poly Inve delivering robust results. This reflects improving credit demand and prudent risk management amid a challenging macroeconomic backdrop.

Meanwhile, the petrochemicals sector, exemplified by Rain Industries, is benefiting from stabilising raw material costs and improving end-market demand, which could support further earnings upgrades in coming quarters.

Technology and analytics firms remain in focus, with upcoming results expected to shed light on digital adoption trends and their impact on corporate profitability.

Conclusion

The December 2025 earnings season presents a complex but cautiously optimistic picture for Indian equities. While the overall proportion of companies reporting positive results has improved, the gains are unevenly spread across market capitalisation segments and sectors. Investors are advised to maintain a balanced portfolio approach, favouring companies with strong fundamentals, consistent execution, and exposure to growth themes.

Monitoring upcoming results, such as those from Fractal Analytics Ltd, will be crucial to gauge the sustainability of current trends and identify emerging opportunities in the evolving market landscape.

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