Quarterly Earnings Trends: A Gradual Upswing

The latest earnings season reflects a steady improvement in corporate profitability across the board. The proportion of companies reporting positive results has increased sequentially over the last four quarters: from 40.0% in March 2025 to 44.0% in June, 42.0% in September, and now 52.0% in December. This upward trajectory suggests a gradual recovery in earnings quality and operational performance amid a challenging macroeconomic backdrop.

However, this aggregate improvement masks considerable divergence across market capitalisation segments. Large caps, traditionally seen as market bellwethers, have delivered a subdued performance with only 31.0% of companies reporting positive results. In contrast, mid caps have outperformed with 61.0% positive results, followed by small caps at 53.0%. This pattern indicates that growth opportunities and earnings resilience are currently concentrated in the mid and small cap universe, which may attract selective investor interest.

Sectoral Standouts and Top Performers

Among large caps, Hindustan Zinc in the non-ferrous metals sector emerged as a top performer, benefiting from favourable commodity prices and operational efficiencies. The company’s earnings beat expectations, supported by strong volumes and cost control measures, which helped offset inflationary pressures.

In the mid-cap space, Bluestone Jewel, operating in the gems, jewellery and watches sector, delivered impressive results. The company capitalised on festive season demand and improved retail footfalls, driving revenue growth and margin expansion. Bluestone’s performance underscores the resilience of discretionary consumption in the mid-cap segment despite broader economic uncertainties.

Among small caps, Indo Thai Securities in the capital markets sector stood out with robust earnings growth. The company benefited from increased market volatility and higher trading volumes, which boosted brokerage income and ancillary revenues. This performance highlights the potential for niche financial services firms to outperform in volatile market conditions.

Exceptional Micro and Small Cap Performances

The micro-cap segment has witnessed some remarkable earnings performances this quarter. String Metaverse Ltd, operating in the paper, forest and jute products sector, reported outstanding financial results. Net sales surged by 140.6% to ₹278.35 crores, while profit before tax (excluding other income) soared by 184.16% to ₹27.45 crores. Net profit after tax grew by an impressive 171.5% to ₹27.72 crores, marking the highest quarterly figures in the company’s history.

String Metaverse’s operating profit margin also improved, with operating profit to net sales reaching 11.42%, the highest recorded for the company. Earnings per share (EPS) stood at ₹2.38, reflecting strong bottom-line growth. Despite a slight downgrade in its mojo score from 40 to 39 over the past three months, the company’s financials remain robust, signalling sustained operational strength.

Other notable micro-cap performers include Sera Investments in the non-banking financial company (NBFC) sector, which also posted strong earnings growth, further highlighting the potential in smaller, less-covered stocks.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 343 stocks declaring results this quarter indicates a cautiously optimistic outlook for the broader market. The rise in positive results to 52.0% suggests improving corporate earnings momentum, which could provide support to equity valuations. However, the disparity between large caps and mid/small caps warrants a selective approach to stock picking.

Investors may find greater opportunities in mid and small cap stocks that are demonstrating earnings resilience and growth potential. The gems and jewellery, capital markets, and non-ferrous metals sectors have shown pockets of strength, while certain micro-cap companies continue to deliver exceptional quarterly performances.

Upcoming results from heavyweight names such as Shriram Finance Ltd, Piramal Finance Ltd, and Bharat Petroleum Corporation Ltd scheduled for 23 January 2026 will be closely watched for further cues on sectoral trends and earnings sustainability.

Outlook and Strategic Considerations

While the earnings season has delivered encouraging signs, investors should remain mindful of the uneven recovery across market capitalisations and sectors. Large caps, despite their size and stability, have yet to demonstrate broad-based earnings improvement, which may temper near-term market enthusiasm.

Conversely, mid and small caps, supported by favourable demand dynamics and operational leverage, appear better positioned for earnings upgrades. This environment favours a balanced portfolio approach that combines the stability of select large caps with the growth potential of mid and small caps.

Quality of earnings and sustainability remain critical factors, especially in the micro-cap space where volatility can be pronounced. Detailed fundamental analysis and monitoring of upcoming quarterly results will be essential to identify reliable performers and avoid potential pitfalls.

Summary

The December 2025 quarter earnings season has highlighted a market in transition, with mid and small caps leading the charge in positive results and profit growth. Large caps have lagged, reflecting ongoing challenges in certain sectors. Exceptional performances from micro-cap companies such as String Metaverse and Sera Investments underscore the opportunities available in less-followed segments. As the market awaits key results from major financial and energy companies, investors are advised to adopt a selective, quality-focused approach to capitalise on the evolving earnings landscape.

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