Quarterly Earnings Trends and Positive Result Proportions

The December quarter saw 46.0% of companies reporting positive results, a slight improvement from 42.0% in September 2025 and 40.0% in June 2025, though marginally below the 45.0% recorded in March 2025. This uptick suggests a tentative recovery in corporate profitability after a subdued first half of the fiscal year. The gradual improvement in positive earnings outcomes reflects cautious optimism among companies navigating a complex macroeconomic environment marked by inflationary pressures and evolving demand patterns.

Market Capitalisation Breakdown: Mid Caps Lead the Charge

Analysing results by market capitalisation reveals a clear divergence in earnings performance. Mid-cap companies outperformed their large- and small-cap peers, with 52.0% reporting positive results. Small caps followed with 46.0%, while large caps lagged at 38.0%. This trend underscores the resilience and growth potential of mid-sized firms, which often benefit from greater agility and niche market positioning compared to their larger counterparts.

Top Performers Across Market Caps

Among large caps, TVS Motor Co. stood out with robust earnings in the automobile sector, reflecting sustained demand and operational efficiencies. In the mid-cap space, FSN E-Commerce delivered strong results, capitalising on the expanding digital retail ecosystem. Small caps saw notable performances from Indo Thai Securities in capital markets, while micro caps such as Trescon (realty) and String Metaverse (paper, forest & jute products) posted impressive earnings, highlighting pockets of strength in niche sectors.

Sectoral Insights and Earnings Drivers

The automobile sector, led by TVS Motor Co., demonstrated resilience despite global supply chain challenges, with volume growth and margin expansion driving earnings beats. The e-commerce sector, represented by FSN E-Commerce, benefited from increased consumer adoption and festive season sales, translating into higher net sales and improved profitability metrics.

Capital markets firms such as Indo Thai Securities capitalised on heightened market activity and trading volumes, resulting in strong profit growth. Meanwhile, the realty and paper sectors, exemplified by micro caps Trescon and String Metaverse respectively, showed encouraging signs of recovery, supported by stabilising input costs and renewed demand.

Spotlight on Kapston Services Ltd: A Standout Small Cap

Among recent declarations, Kapston Services Ltd delivered an outstanding quarter for December 2025. The company’s profit before tax less other income (PBT less OI) surged by 100.29% to ₹6.93 crores, while net sales reached a record ₹212.66 crores. Operating profit to interest ratio improved to 3.44 times, signalling robust operational efficiency. Profit after tax (PAT) grew 64.0% to ₹7.43 crores, with earnings per share (EPS) hitting a high of ₹3.66. Inventory turnover ratio also reached an impressive 170.86 times, underscoring effective working capital management.

Despite a slight decline in its score from 32 to 30 over the past three months, Kapston Services’ bullish stance since early February 2026 reflects strong market confidence in its financial trajectory and operational execution.

Aggregate Profit Growth and Market Sentiment

While the aggregate profit growth across the 1660 companies is not explicitly quantified, the rising proportion of positive results and notable earnings beats in mid and small caps suggest a moderate improvement in corporate earnings momentum. However, the relatively lower positive result ratio among large caps indicates ongoing challenges for some heavyweight sectors, possibly due to global economic uncertainties and cost pressures.

Investor sentiment remains cautiously optimistic, with market participants closely monitoring upcoming results from key players such as Zydus Lifesciences Ltd, Linde India Ltd, and Aurobindo Pharma Ltd, scheduled for 09 February 2026. These companies operate in defensive and industrial sectors, which could provide further clarity on the broader earnings outlook.

Outlook and Strategic Considerations for Investors

Given the mixed earnings landscape, investors are advised to focus on companies demonstrating strong fundamentals, consistent margin improvement, and resilient cash flows. Mid-cap firms continue to offer attractive growth opportunities, while select large caps with robust operational metrics may provide stability amid volatility.

Sectoral rotation towards consumer discretionary, capital markets, and niche industrials could be a prudent strategy, supported by earnings momentum and valuation considerations. Monitoring inventory turnover, operating profit to interest ratios, and PBT growth remains critical for assessing quality of earnings and financial health.

Conclusion

The December 2025 quarter earnings season paints a picture of gradual recovery tempered by sectoral disparities and macroeconomic headwinds. With 46.0% of companies reporting positive results, the market is witnessing cautious optimism, particularly among mid and small caps. Standout performers like Kapston Services Ltd exemplify the potential for strong earnings growth in select pockets. As the market awaits upcoming results from major pharmaceutical and industrial firms, investors should remain vigilant, favouring companies with solid fundamentals and sustainable growth trajectories.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →