Quarterly Earnings Overview and Trend Analysis
The Dec-2025 quarter saw 54.0% of companies reporting positive results, a marked improvement from 43.0% in September 2025 and 40.0% in June 2025. This upward trend suggests a gradual recovery in corporate earnings momentum after a subdued first half of the fiscal year. The March 2025 quarter had a 44.0% positive result ratio, indicating that the latest quarter has surpassed recent performance benchmarks.
Profit growth has been uneven across sectors and market capitalisation categories, with mid-cap stocks emerging as the primary drivers of earnings expansion. Large caps, traditionally seen as market bellwethers, lagged behind with only 34.0% reporting positive results, while mid caps and small caps posted 62.0% and 56.0% respectively. This divergence highlights a shift in market dynamics where mid-sized companies are capitalising on niche opportunities and operational efficiencies to deliver stronger earnings growth.
Market Capitalisation Segments: Winners and Laggards
Among large caps, Piramal Finance stood out with robust earnings, although the sector-wide performance remained tepid. Mid caps were led by Laurus Labs, a key player in Pharmaceuticals & Biotechnology, which reported solid revenue and profit growth, reflecting sustained demand in the healthcare segment. Small caps saw Indo Thai Securities from the Capital Markets sector deliver impressive results, underscoring the resilience of financial services firms amid market volatility.
Micro caps produced some of the most remarkable performances, with String Metaverse (Paper, Forest & Jute Products) and Sera Investments (Non-Banking Financial Company) posting top results. These companies demonstrated exceptional growth rates, albeit from smaller bases, signalling potential opportunities for investors seeking high-growth prospects in less-followed segments.
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Sectoral Highlights and Earnings Drivers
The Pharmaceuticals & Biotechnology sector, represented by Laurus Labs, continued to benefit from strong export demand and new product launches, contributing to mid-cap outperformance. Meanwhile, the Capital Markets sector, with Indo Thai Securities at the forefront, capitalised on increased market activity and higher brokerage income, reflecting a more buoyant investment climate.
In the Realty sector, Raymond Realty Ltd. reported stellar results for the December quarter. Net sales surged by 136.7% to ₹757.55 crores, marking the highest quarterly sales in the company’s history. Operating profit to interest ratio reached a peak of 5.31 times, signalling improved operational efficiency and debt servicing capability. Profit before tax (excluding other income) soared by 309.5% to ₹68.78 crores, while net profit after tax grew by 225.4% to ₹66.79 crores. These figures represent all-time highs for the company, underscoring a strong turnaround and robust demand in the real estate segment.
Profitability and Quality Assessment
Aggregate profit growth across the 451 companies was driven largely by mid and small caps, which have shown resilience amid macroeconomic uncertainties. The quality of earnings, as measured by operating profit margins and interest coverage ratios, improved notably in sectors such as realty and pharmaceuticals. Large caps, despite their size and market influence, showed a more cautious earnings profile, with many companies facing margin pressures due to input cost inflation and subdued demand in certain industries.
Investors should note the divergence in earnings quality and growth prospects across market segments. Mid caps, with their higher positive result ratio and stronger profit growth, present compelling opportunities for portfolio diversification. However, the volatility inherent in smaller companies necessitates careful stock selection and risk management.
Upcoming Earnings to Watch
Market participants will closely monitor the results of heavyweight companies scheduled to report on 28 January 2026, including Bharat Electronics Ltd, Larsen & Toubro Ltd., and TVS Motor Company Ltd. These results are expected to provide further clarity on sectoral trends and the sustainability of earnings momentum heading into the new fiscal year.
Key Takeaways for Investors:
- Mid-cap companies are leading the earnings recovery with a 62.0% positive result ratio.
- Large caps lag with only 34.0% reporting positive results, reflecting sectoral headwinds.
- Raymond Realty Ltd. posted record quarterly sales and profits, signalling strength in real estate demand.
- Pharmaceuticals and Capital Markets sectors remain bright spots amid broader market challenges.
- Upcoming results from major corporates will be critical in shaping market sentiment.
Conclusion: Navigating a Mixed Earnings Landscape
The December 2025 quarter earnings season paints a nuanced picture of India’s corporate health. While the overall proportion of companies reporting positive results has improved to 54.0%, the gains are unevenly distributed. Mid caps have emerged as the clear outperformers, delivering robust profit growth and signalling a shift in market leadership. Large caps, despite their scale, face ongoing challenges that have tempered earnings growth.
For investors, this environment calls for a discerning approach that favours quality mid-cap stocks with strong fundamentals and growth visibility. The standout performances from companies like Laurus Labs, Indo Thai Securities, and Raymond Realty Ltd. exemplify the potential rewards of targeted stock selection. Meanwhile, monitoring upcoming results from blue-chip firms will be essential to gauge the broader economic recovery and corporate earnings trajectory in 2026.
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