Quarterly Earnings Trends and Positive Result Proportions

The latest quarter saw a notable rise in the percentage of companies delivering positive results, climbing to 52.0% from 43.0% in September 2025. This marks the highest proportion of positive earnings in the last four quarters, surpassing the 40.0% and 44.0% recorded in June and March 2025 respectively. The improvement suggests a gradual recovery in corporate profitability, albeit with significant variation depending on company size and sectoral exposure.

Market Capitalisation Breakdown: Mid and Small Caps Lead

Analysing results by market capitalisation reveals that mid-cap and small-cap companies outperformed their large-cap counterparts in terms of positive earnings outcomes. Mid-cap firms reported a robust 57.0% positive result ratio, closely followed by small caps at 55.0%. In contrast, only 36.0% of large-cap companies posted positive earnings surprises, indicating that larger firms may be facing more pronounced headwinds or are in more mature phases of their business cycles.

This divergence highlights the ongoing dynamism in mid and small-cap segments, which often benefit from niche market opportunities and faster growth trajectories. However, the relatively subdued performance of large caps warrants closer scrutiny, especially given their outsized influence on benchmark indices and investor portfolios.

Sectoral Highlights and Top Performers

Among large caps, TVS Motor Company from the automobile sector stood out with strong quarterly results, reflecting resilience in consumer demand and operational efficiencies. The company’s performance underscores the ongoing recovery in the automotive industry, supported by favourable macroeconomic factors and easing supply chain constraints.

In the mid-cap space, GE Vernova T&D from the heavy electrical equipment sector delivered impressive results, benefiting from increased infrastructure spending and government initiatives aimed at modernising power transmission networks. This sector’s growth prospects remain robust, driven by rising energy demand and renewable energy integration.

Small-cap companies also showcased notable performers, with Indo Thai Securities in the capital markets sector reporting strong earnings, reflecting increased market activity and investor participation. The capital markets sector continues to benefit from heightened retail and institutional interest, bolstering brokerage and related financial services.

Micro Cap Standouts

Among micro caps, String Metaverse in the paper, forest and jute products sector emerged as a top performer, signalling niche opportunities in traditional industries adapting to modern market demands. Additionally, STEL Holdings, a non-banking financial company (NBFC), delivered an outstanding quarter with exceptional growth across key financial metrics.

STEL Holdings: A Case Study in Exceptional Growth

STEL Holdings reported net sales of ₹17.20 crores for the December 2025 quarter, marking a remarkable 203.0% increase compared to its previous four-quarter average. Profit before tax (excluding other income) surged by 199.8% to ₹17.05 crores, while profit after tax rose 194.8% to ₹12.58 crores. These figures represent the highest quarterly levels recorded by the company, with earnings per share reaching ₹6.81.

The company’s financial score improved significantly from 13 to 36 over the past three months, reflecting a strong turnaround and operational momentum. STEL Holdings’ performance highlights the potential for well-managed NBFCs to capitalise on credit demand and market opportunities despite broader economic uncertainties.

Upcoming Earnings to Watch

Investors should keep an eye on the forthcoming results of heavyweight companies such as Vedanta Ltd., ITC Ltd., and REC Ltd., all scheduled to announce their December 2025 quarter earnings on 29 January 2026. These companies’ performances will provide further insight into the health of their respective sectors and the broader market environment.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 569 companies reporting this quarter indicates a cautiously optimistic outlook for corporate India. The rise in positive earnings surprises to over half of the sample suggests improving business conditions, though the disparity between market cap segments signals uneven recovery dynamics.

Large caps’ relatively muted results may reflect challenges such as margin pressures, global economic uncertainties, and sector-specific headwinds. Conversely, mid and small caps appear to be capitalising on growth opportunities, innovation, and domestic demand trends.

For investors, this mixed earnings landscape underscores the importance of selective stock picking and sectoral analysis. Companies demonstrating consistent earnings upgrades, strong balance sheets, and favourable growth prospects are likely to outperform in the coming quarters.

Conclusion: Navigating a Complex Earnings Season

The December 2025 earnings season paints a picture of gradual recovery tempered by sectoral and size-based disparities. While mid and small caps continue to show promise with higher proportions of positive results, large caps face a more challenging environment. Standout performers such as TVS Motor Co., GE Vernova T&D, Indo Thai Securities, and STEL Holdings exemplify the diversity of opportunities available to discerning investors.

As the market awaits results from major upcoming companies, the evolving earnings trends will be critical in shaping investor sentiment and portfolio strategies for 2026. A balanced approach that weighs growth potential against risk factors will be essential in capitalising on the current market environment.

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