Quarterly Earnings Overview and Trends

The latest quarter saw 46.0% of companies reporting positive earnings, a slight uptick from 44.0% in September 2025 and 41.0% in June 2025, though still marginally below the 47.0% recorded in March 2025. This gradual improvement suggests a tentative recovery in corporate profitability amid ongoing macroeconomic challenges. The aggregate results indicate that while some sectors are regaining momentum, others continue to face headwinds, reflecting the uneven pace of economic revival.

Market Capitalisation Segmentation

Breaking down the results by market cap reveals a clear pattern: mid-cap companies outperformed their large and small-cap counterparts with 53.0% delivering positive earnings surprises. Small caps followed with 45.0%, while large caps lagged at 43.0%. This divergence highlights the resilience and growth potential of mid-sized firms, which often benefit from greater agility and niche market positioning compared to their larger peers.

Sectoral Standouts and Leading Performers

Among large caps, Muthoot Finance emerged as a top performer within the Non-Banking Financial Company (NBFC) sector, demonstrating robust credit growth and improved asset quality that bolstered its quarterly profits. The company’s ability to sustain earnings growth amid tightening credit conditions is noteworthy and reflects strong operational execution.

In the mid-cap space, FSN E-Commerce led the pack in the E-Retail sector, capitalising on increased consumer spending and digital penetration. Its results showcased significant revenue expansion and margin improvement, signalling a positive outlook for e-commerce players benefiting from structural shifts in consumer behaviour.

Among small caps, Ashiana Housing stood out in the Realty sector, reporting solid sales growth and improved collections, which translated into better profitability. The company’s focus on affordable housing segments appears to be paying dividends amid sustained demand in this category.

Micro Cap Highlights

Micro-cap companies also delivered notable performances, with Jindal Poly Inve (NBFC sector) and Trescon (Realty sector) posting strong earnings growth, reflecting niche market leadership and operational efficiencies. Additionally, Indo Thai Securities in the Capital Markets sector impressed with improved brokerage income and cost control measures, contributing to a healthy bottom line.

Recent Earnings Spotlight: Schaeffler India Ltd.

Among the latest results declared, Schaeffler India Ltd., a key player in the Auto Components & Equipment industry, reported its highest-ever quarterly figures for December 2025. Net sales surged to ₹2,724.20 crores, while PBDIT reached ₹484.12 crores, both marking record highs. Profit after tax (PAT) grew by 21.0% compared to the previous four-quarter average, standing at ₹322.36 crores. Earnings per share (EPS) also hit a peak of ₹20.62. This strong performance has improved the company’s financial score from 9 to 18 over the past three months, signalling a positive shift in market sentiment.

Aggregate Profit Growth and Earnings Quality

Overall, the earnings season reflects a cautious but improving profit environment. The 21.0% PAT growth reported by Schaeffler India is emblematic of the pockets of strength seen across sectors, particularly in industrial and consumer discretionary segments. However, the sub-50% positive result ratio across the broader market indicates that many companies continue to grapple with margin pressures, input cost inflation, and demand uncertainties.

Quality of earnings remains a key focus, with companies demonstrating sustainable revenue growth and disciplined cost management receiving favourable assessments. The divergence in results between market cap segments also suggests that investors may need to adopt a selective approach, favouring mid-cap and niche players with robust fundamentals over large caps facing cyclical headwinds.

Upcoming Earnings to Watch

Investors should keep an eye on the forthcoming results from John Cockerill India Ltd and Vesuvius India Ltd scheduled for 26 February 2026, as well as Rain Industries Ltd on 27 February 2026. These companies operate in sectors sensitive to global commodity cycles and industrial demand, and their performance will provide further clarity on the sustainability of the current earnings momentum.

Sectoral Outlook and Market Implications

The mixed earnings outcomes underscore the importance of sectoral differentiation in portfolio construction. Financial services, particularly NBFCs, continue to show resilience, supported by improving asset quality and credit growth. Meanwhile, technology and e-commerce sectors benefit from structural tailwinds, as evidenced by FSN E-Commerce’s strong showing.

Conversely, sectors such as realty and capital markets display a more nuanced picture, with select companies like Ashiana Housing and Indo Thai Securities outperforming their peers. Investors should remain vigilant to macroeconomic developments, including interest rate movements and inflation trends, which could impact corporate earnings in the near term.

Conclusion

The December 2025 quarterly results season paints a picture of gradual recovery tempered by ongoing challenges. While mid-cap companies and select sectors demonstrate encouraging earnings growth, the overall market remains cautious with less than half of the companies reporting positive results. This environment calls for discerning stock selection and a focus on quality earnings to navigate the evolving market landscape effectively.

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