Overall Earnings Trend and Positive Result Proportion

The proportion of companies reporting positive results in the December 2025 quarter rose to 55.0%, a significant improvement from 42.0% in September 2025 and 40.0% in June 2025. This marks the highest positive result ratio in the last four quarters, signalling a gradual recovery in corporate profitability after a subdued first half of the fiscal year.

Despite this improvement, the distribution of positive results remains uneven across market capitalisation segments. Large caps reported only 35.0% positive results, reflecting ongoing challenges in sectors dominated by these companies. In contrast, mid caps delivered a robust 67.0% positive result ratio, while small caps also outperformed with 57.0% positive outcomes. This divergence highlights the resilience and growth potential in the mid and small cap space amid a challenging macroeconomic environment.

Sectoral and Company Highlights

Among large caps, Hindustan Zinc from the Non-Ferrous Metals sector stood out with strong earnings growth, benefiting from favourable commodity prices and operational efficiencies. The company’s performance underscores the selective strength within the metals space despite broader headwinds.

In the mid-cap segment, Persistent Systems, a leader in the Computers - Software & Consulting sector, delivered impressive results. The company’s revenue growth and margin expansion reflect sustained demand for digital transformation services, positioning it well for continued outperformance.

Small caps witnessed notable performances from Indo Thai Securities in Capital Markets, Poonawalla Finance in Non-Banking Financial Companies (NBFC), and Waaree Renewable Energy in the Power sector. These companies demonstrated strong earnings growth and operational improvements, highlighting the opportunities in niche sectors and emerging themes.

In-Depth Look: Rajoo Engineers Ltd’s Strong Quarter

Among the 48 companies that declared results in the last 24 hours, Rajoo Engineers Ltd, an industrial manufacturing company with a market cap of ₹1,238.93 crores, delivered a very positive financial performance for the December 2025 quarter. The company’s financial score improved from 26 to 28 over the past three months, reflecting enhanced operational metrics and profitability.

Rajoo Engineers reported a Profit Before Tax excluding other income (PBT LESS OI) of ₹18.88 crores, marking a remarkable 96.05% growth year-on-year. Net sales surged by 56.21% to ₹87.60 crores, while Profit After Tax (PAT) rose 79.1% to ₹16.84 crores. The company also recorded its highest-ever PBDIT at ₹22.27 crores, with operating profit to net sales ratio reaching a peak of 25.42%, indicating improved cost efficiencies and pricing power.

Additionally, Rajoo’s Earnings Per Share (EPS) for the quarter hit a record high of ₹0.94, supported by a strong cash and cash equivalents position of ₹131.71 crores as of the half-year mark. These results have shifted the stock’s technical outlook from Bearish to Mildly Bearish as of 5 January 2026, signalling potential for further positive momentum if operational trends sustain.

Sectoral Patterns and Market Capitalisation Insights

The earnings season has reinforced the narrative that mid and small caps are currently driving market optimism. Mid caps’ 67.0% positive result ratio is a testament to their agility and exposure to growth sectors such as technology, financial services, and specialised manufacturing. Small caps, with 57.0% positive results, continue to benefit from niche sector leadership and emerging themes like renewable energy and capital markets.

Conversely, large caps remain under pressure, with only 35.0% reporting positive results. This is partly due to the weight of cyclical sectors such as banking, oil & gas, and traditional manufacturing, which are facing margin pressures and subdued demand. However, select large caps like Hindustan Zinc demonstrate that opportunities persist within this segment for companies with strong pricing power and cost control.

Upcoming Earnings to Watch

Investors should keep an eye on the upcoming results of key companies scheduled for 21 January 2026, including Eternal Ltd, Dr Reddy’s Laboratories Ltd, and KEI Industries Ltd. These companies operate in diverse sectors such as pharmaceuticals, industrial cables, and specialty chemicals, and their performance will provide further clarity on sectoral momentum heading into the new calendar year.

Implications for Investors

The December quarter earnings season suggests a cautiously improving corporate earnings environment, with mid and small caps offering more compelling growth prospects relative to large caps. Investors may consider increasing exposure to mid-cap companies with strong earnings momentum and sector tailwinds, while selectively monitoring large caps for turnaround opportunities.

Quality of earnings and operational efficiency remain key differentiators. Companies like Rajoo Engineers exemplify how margin expansion and cash flow strength can underpin sustainable growth. Meanwhile, sectors such as software services, renewable energy, and capital markets continue to attract investor interest due to favourable structural trends.

Overall, the earnings season reinforces the importance of a diversified portfolio approach, balancing growth-oriented mid and small caps with defensive large caps that demonstrate resilience.

Conclusion

The December 2025 quarterly results have delivered a mixed but encouraging picture for Indian equities. The rise in positive earnings surprises to 55.0% marks progress from earlier quarters, driven by mid and small caps outperforming their larger counterparts. Select companies across sectors have demonstrated strong operational execution and profitability gains, signalling pockets of strength in an otherwise cautious market environment.

As the earnings season progresses, investors should focus on companies with robust fundamentals, sustainable margin improvement, and strong cash flows. Monitoring upcoming results from key players will be crucial to gauge the sustainability of this earnings recovery trend heading into 2026.

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