Overall Earnings Trend and Market Cap Analysis

The proportion of companies reporting positive results has steadily increased over the last four quarters, rising from 41.0% in June 2025 to 57.0% in March 2026. This upward trajectory suggests improving business conditions and operational efficiencies amid a challenging macroeconomic backdrop.

Breaking down by market capitalisation, mid-cap stocks led the charge with an impressive 72.0% positive result ratio, followed by small caps at 59.0%. Large caps lagged behind, with only 38.0% of companies reporting positive earnings, indicating a more mixed performance among the market’s heavyweight constituents.

This divergence highlights the resilience and growth potential of mid and small cap companies, which appear to be capitalising on niche opportunities and operational agility. Conversely, large caps are facing headwinds from global uncertainties and sector-specific challenges.

Sectoral Highlights and Top Performers

Among large caps, ICICI Bank stood out as a top performer within the private sector banking space, demonstrating robust credit growth and stable asset quality. Its results contributed positively to the overall sentiment in the banking sector, despite some peers reporting subdued earnings.

In the mid-cap segment, Bank of Maharashtra emerged as a notable outperformer in the public sector banking category. The bank’s turnaround efforts and improved provisioning policies have translated into better-than-expected profitability, earning it recognition among investors and analysts alike.

Small caps delivered some of the most impressive results this quarter, with Navkar Corporation in the transport services sector leading the pack. The company reported a remarkable 92.55% growth in net sales to ₹200.77 crores, alongside a 175.4% surge in profit after tax (PAT) to ₹13.98 crores. Operating profit margins also expanded, with operating profit to net sales reaching a high of 19.85%, underscoring operational leverage and cost control.

Navkar’s operating profit to interest ratio hit an outstanding 10.27 times, reflecting strong earnings quality and financial health. Its profit before tax (PBT) less other income grew by 159.29%, signalling robust core business performance. The company’s earnings per share (EPS) for the quarter stood at ₹0.93, the highest recorded to date.

Other small cap stars included Waaree Renewable Energy in the power sector and SG Finserve, a non-banking financial company (NBFC), both of which posted strong earnings growth and margin improvements, reinforcing the small cap segment’s leadership in this earnings cycle.

Quality of Earnings and Forward Outlook

The improving trend in positive results, particularly among mid and small caps, suggests a broad-based recovery in corporate earnings. However, the relatively lower positive result ratio among large caps indicates ongoing challenges in sectors such as commodities, IT, and certain industrials, where global demand and input cost pressures persist.

Investors should note that the quality of earnings is also improving, as evidenced by expanding operating margins and stronger interest coverage ratios in several companies. This bodes well for sustainable profitability and credit profiles going forward.

Looking ahead, the market will closely watch upcoming results from heavyweight companies such as SBI Life Insurance, Tech Mahindra, and Trent Ltd, scheduled for 22 April 2026. Their performance will provide further clarity on sectoral momentum and earnings sustainability in the near term.

Implications for Investors

Given the current earnings landscape, investors may consider tilting portfolios towards mid and small cap stocks that have demonstrated strong operational execution and earnings growth. The banking sector, particularly public sector banks like Bank of Maharashtra, offers compelling opportunities amid improving asset quality and credit demand.

Conversely, caution is warranted in large caps where earnings remain uneven and external risks such as geopolitical tensions and inflationary pressures could weigh on margins. Active monitoring of quarterly updates and earnings revisions will be critical for informed decision-making.

Summary

The March 2026 quarterly earnings season reflects a cautiously optimistic environment, with a clear improvement in the proportion of companies reporting positive results. Mid and small caps are driving this momentum, supported by strong sales growth, margin expansion, and improved profitability metrics. Large caps, while showing pockets of strength, continue to face sector-specific challenges that temper overall earnings growth.

As the earnings season progresses, investors should focus on companies with robust fundamentals, quality earnings, and sustainable growth prospects to capitalise on the evolving market dynamics.

Get Started for only Rs. 16,999 - Get MojoOne for 2 Years + 1 Year Absolutely FREE! (72% Off) Start Today