Overall Results and Positive Trends

Out of the 1,201 companies that declared their December quarter results, 48.0% posted positive earnings surprises, marking an improvement from the 42.0% in September 2025 and 40.0% in June 2025. This uptick suggests a gradual strengthening in corporate profitability and operational efficiency as the economy navigates post-pandemic challenges and global uncertainties.

However, the proportion of positive results remains below the 50% mark, indicating that nearly half of the companies either missed estimates or reported flat to negative earnings growth. This mixed outcome underscores the uneven recovery across sectors and market capitalisations.

Market Capitalisation Analysis

Breaking down the results by market cap reveals a stark contrast in earnings performance. Large cap companies reported a positive results proportion of only 36.0%, significantly lower than mid caps at 54.0% and small caps at 49.0%. This divergence suggests that mid cap firms are currently leading the earnings momentum, possibly benefiting from niche market positions and greater operational agility.

Large caps, often more exposed to global economic headwinds and regulatory pressures, appear to be facing tougher challenges in sustaining earnings growth. Conversely, mid caps and small caps are showing resilience, with several companies delivering robust quarter-on-quarter improvements.

Sectoral Highlights and Top Performers

Among large caps, TVS Motor Co. stood out with a strong earnings beat in the automobile sector, reflecting sustained demand and improved cost management. The company’s performance signals a positive outlook for the automotive industry, which has been gradually recovering from supply chain disruptions.

In the mid cap space, GE Vernova T&D from the heavy electrical equipment sector delivered impressive results, driven by increased order inflows and operational efficiencies. This performance highlights the ongoing infrastructure push and electrification trends supporting the sector’s growth trajectory.

Small caps also showcased notable performers such as Indo Thai Securities in the capital markets sector, which benefited from heightened market activity and improved brokerage revenues.

Exceptional Results from Micro and Small Caps

Among micro caps, String Metaverse in the paper, forest, and jute products sector emerged as the top performer, reflecting niche market strength and operational leverage. Small cap companies like Mahindra Life in realty and Cupid in FMCG also posted standout results, indicating pockets of robust growth in traditionally volatile sectors.

Spotlight on Aether Industries Ltd: Specialty Chemicals Sector

Aether Industries Ltd, a mid cap player in the specialty chemicals industry with a market cap of ₹13,730.74 crores, reported an outstanding quarter for December 2025. The company’s mojo score improved from 30 to 34 over the past three months, reflecting enhanced financial health and operational performance.

Key highlights include net sales reaching a record ₹317.12 crores, a 27.3% growth compared to the previous four-quarter average. Operating profit to net sales ratio surged to 34.87%, the highest recorded, while PBDIT stood at ₹110.59 crores. The company’s PBT less other income rose by 47.8% to ₹89.40 crores, signalling strong core profitability.

Further, Aether’s PAT of ₹66.21 crores marked a 30.6% increase over the prior four-quarter average, with earnings per share hitting a peak of ₹4.86. Efficiency ratios also improved, with inventory turnover at 2.14 times and debtors turnover at 3.24 times, underscoring effective working capital management.

Sectoral and Market Implications

The December quarter results reflect a cautious optimism across sectors. While cyclical industries such as automobiles and heavy electrical equipment are showing signs of recovery, defensive sectors like FMCG and capital markets continue to deliver steady earnings growth. The disparity in positive result proportions between large and mid caps suggests investors may find better opportunities in mid-sized companies with growth potential.

However, the sub-50% positive result rate overall indicates that risks remain, including inflationary pressures, global economic uncertainties, and sector-specific challenges. Investors should weigh these factors carefully when positioning portfolios for the coming quarters.

Upcoming Earnings to Watch

Market participants will closely monitor the results of heavyweight companies scheduled to announce in early February 2026, including Power Finance Corporation Ltd, Tata Motors Passenger Vehicles Ltd, and Bharti Airtel Ltd on 05 Feb 2026. These results will provide further clarity on sectoral momentum and broader market direction.

Conclusion

The December 2025 earnings season paints a picture of selective strength amid ongoing challenges. Mid cap companies are leading the charge with a higher proportion of positive results, while large caps face headwinds that temper overall market optimism. Sectoral leaders in automobiles, heavy electrical equipment, and specialty chemicals offer promising investment avenues, supported by robust operational metrics and profit growth.

Investors should remain vigilant, balancing exposure between growth-oriented mid caps and stable large caps, while monitoring upcoming earnings for confirmation of emerging trends.

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