Quarterly Earnings Trends and Positive Result Proportions
The December quarter marked a notable improvement in the share of companies reporting positive results, rising to 54.0% from 42.0% in September 2025 and 40.0% in June 2025. This upward trajectory suggests a gradual recovery in corporate profitability after a subdued first half of the fiscal year. The March 2025 quarter had seen 44.0% of companies posting positive results, indicating that the latest quarter represents the strongest earnings momentum in the past year.
However, this aggregate improvement masks significant disparities when analysed by market capitalisation. Large-cap companies reported a relatively modest 34.0% positive result ratio, reflecting ongoing challenges in sectors dominated by these firms. In contrast, mid-cap stocks delivered a robust 64.0% positive result rate, signalling stronger earnings resilience and growth potential in this segment. Small caps also outperformed large caps with 55.0% positive results, underscoring the dynamic nature of smaller enterprises in the current market environment.
Sectoral and Market Cap Leaders in Earnings Performance
Among large caps, Hindustan Zinc stood out with impressive results in the non-ferrous metals sector, benefiting from stable commodity prices and operational efficiencies. The company’s performance underscores the resilience of select metal producers despite global volatility.
Mid-cap companies also delivered standout performances, with Persistent Systems in the software and consulting sector leading the pack. Persistent’s results reflect sustained demand for digital transformation services and strong order book growth, which have bolstered its profitability and cash flow metrics.
Small-cap stocks demonstrated notable earnings strength, with Indo Thai Securities in the capital markets sector emerging as the top performer. Alongside Indo Thai Securities, Poonawalla Finance (NBFC sector) and Waaree Renewables (power sector) also posted exceptional results, highlighting the breadth of growth opportunities in niche financial and renewable energy segments.
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Rajoo Engineers: A Case Study in Mid-Cap Earnings Strength
Among recent disclosures, Rajoo Engineers Ltd, an industrial manufacturing mid-cap company with a market cap of ₹1,238.93 crores, reported 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 and profitability metrics.
Rajoo Engineers posted a Profit Before Tax (PBT) excluding other income of ₹18.88 crores, marking a remarkable growth of 96.05% year-on-year. Net sales surged by 56.21% to ₹87.60 crores, while Profit After Tax (PAT) rose by 79.1% to ₹16.84 crores. The company also recorded its highest-ever PBDIT at ₹22.27 crores, with an operating profit margin to net sales reaching a peak of 25.42%. Earnings per share (EPS) for the quarter stood at ₹0.94, the highest on record, supported by a strong cash and cash equivalents position of ₹131.71 crores at half-year end.
This robust performance has shifted Rajoo Engineers’ market sentiment from bearish to mildly bearish since early January 2026, signalling improving investor confidence. The company’s operational leverage and margin expansion are key drivers behind this positive outlook.
Sectoral Insights and Broader Market Implications
The earnings season highlights a bifurcated market where mid and small caps are outperforming large caps, driven by sector-specific tailwinds and nimble business models. Technology and software services continue to benefit from digital adoption trends, while capital markets and renewable energy sectors are capitalising on structural growth themes.
Conversely, large caps face headwinds from global macroeconomic uncertainties and commodity price fluctuations, which have constrained earnings growth in traditional heavy industries and financial services. Investors may need to recalibrate portfolios to capture growth in mid and small-cap segments while managing risks associated with large-cap earnings volatility.
Looking ahead, key upcoming results from companies such as Adani Energy Solutions Ltd, Interglobe Aviation Ltd, and DLF Ltd on 22 January 2026 will provide further clarity on sectoral momentum and market direction for the remainder of the fiscal year.
Aggregate Profit Growth and Market Sentiment
The aggregate profit growth reflected in the December quarter results is encouraging, with more than half of the companies reporting positive earnings surprises. This improvement from previous quarters suggests that corporate India is gradually navigating through inflationary pressures, supply chain disruptions, and geopolitical uncertainties.
Market participants should note the importance of earnings quality and sustainability, as reflected in companies like Rajoo Engineers, which combine top-line growth with margin expansion and strong cash flows. Such attributes are likely to attract premium valuations and investor interest in the near term.
Summary of Key Earnings Highlights:
- 54.0% of companies reported positive results in Dec-2025, up from 42.0% in Sep-2025.
- Mid-cap stocks led with 64.0% positive results, outperforming large caps at 34.0%.
- Top performers include Hindustan Zinc (Large Cap), Persistent Systems (Mid Cap), and Indo Thai Securities (Small Cap).
- Rajoo Engineers demonstrated exceptional growth with 96.05% PBT increase and record margins.
- Upcoming results from key companies on 22 Jan 2026 will be critical for market direction.
Investor Takeaways
Investors should consider increasing exposure to mid and small-cap stocks that are demonstrating earnings resilience and growth potential. The divergence in performance across market caps and sectors underscores the need for selective stock picking and thematic investing aligned with structural growth trends such as technology adoption, renewable energy, and financial services innovation.
Meanwhile, caution is warranted for large-cap stocks facing margin pressures and slower earnings recovery. Monitoring upcoming quarterly disclosures will be essential to gauge whether the positive momentum in mid and small caps can sustain and broaden across the market.
Conclusion
The December 2025 earnings season paints a cautiously optimistic picture for Indian equities. While challenges remain for large-cap companies, the strong showing from mid and small caps offers a compelling narrative of growth and recovery. Investors who focus on quality earnings growth, margin improvement, and sectoral tailwinds are likely to find attractive opportunities in the current market environment.
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