Quarterly Earnings Trends: A Gradual Upswing

The latest quarter saw 428 companies declare results, with 55.0% reporting positive earnings, a marked improvement compared to 43.0% in September 2025 and 40.0% in June 2025. This upward trajectory suggests a gradual recovery in corporate profitability amid a challenging macroeconomic backdrop. The March 2025 quarter had a slightly lower positive result proportion at 44.0%, reinforcing the significance of the current quarter’s performance.

Analysing the trend over the last four quarters, the December 2025 results indicate a strengthening earnings momentum, driven by operational efficiencies and sector-specific tailwinds. However, the distribution of positive results varies considerably across market capitalisation segments.

Market Capitalisation Breakdown: Mid Caps Lead the Charge

Mid-cap companies have delivered the strongest positive results, with 61.0% beating expectations or reporting growth, followed by small caps at 56.0%. Large caps lag behind, with only 38.0% posting positive results. This divergence highlights the resilience and growth potential of mid-sized firms, which often benefit from greater agility and sectoral focus.

Large caps, despite their scale and market influence, appear to be grappling with margin pressures and slower top-line growth, possibly reflecting global economic uncertainties and sectoral headwinds. Conversely, mid and small caps have capitalised on niche opportunities and domestic demand recovery, driving better earnings outcomes.

Sectoral and Company Highlights

Among large caps, Piramal Finance stood out with robust earnings, though detailed sectoral data remains limited. In the mid-cap space, Laurus Labs from the Pharmaceuticals & Biotechnology sector delivered impressive results, underscoring the sector’s continued strength amid rising healthcare demand and export opportunities.

Small caps also showcased notable performers, with Indo Thai Securities in the Capital Markets sector reporting strong earnings growth, reflecting increased market activity and investor participation.

Micro-cap companies have produced some of the most remarkable results, with String Metaverse (Paper, Forest & Jute Products), Indo Thai Securities (Capital Markets), and Sera Investments (Non-Banking Financial Company) topping the charts. These companies have demonstrated exceptional growth rates and profitability, albeit from smaller bases, signalling potential opportunities for investors seeking high-growth stocks.

Chennai Petroleum Corporation Ltd: A Standout Performer

Among the recent declarations, Chennai Petroleum Corporation Ltd (CPCL) has delivered a very positive financial performance for the December 2025 quarter. The company’s Profit Before Tax excluding Other Income (PBT LESS OI) surged to ₹1,302.39 crores, reflecting a staggering 244.5% growth compared to its previous four-quarter average. Similarly, Profit After Tax (PAT) rose sharply by 242.5% to ₹1,001.59 crores, marking the highest quarterly profit recorded by the company.

Net sales for the half-year reached ₹32,010.51 crores, growing by 27.98%, while the Profit Before Depreciation, Interest and Taxes (PBDIT) hit a record ₹1,477.95 crores. CPCL’s operating profit margin also improved significantly, with operating profit to net sales ratio reaching 9.42%, the highest in recent history. Earnings per share (EPS) for the quarter stood at ₹67.26, underscoring the company’s strong earnings quality and operational efficiency.

CPCL’s financial score improved from 21 to 25 over the last three months, reflecting enhanced market sentiment and fundamental strength. The stock’s mild bullish stance since mid-December 2025 further supports its positive outlook.

Upcoming Earnings to Watch

Investors should keep a close eye on the upcoming results from major companies such as Axis Bank Ltd (due 26 Jan 2026), Asian Paints Ltd (27 Jan 2026), and CG Power & Industrial Solutions Ltd (27 Jan 2026). These companies operate in sectors critical to economic growth and consumer demand, and their earnings will provide further clarity on the broader market trajectory.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 428 companies reporting this quarter indicates a cautiously optimistic environment. The rise in positive results from 40-44% in earlier quarters to 55% in December 2025 suggests improving corporate earnings resilience. However, the disparity between large caps and mid/small caps highlights ongoing challenges for the largest firms, which face global headwinds and margin pressures.

Sectoral leaders in pharmaceuticals, capital markets, and select financial services continue to drive earnings growth, while commodity-linked and industrial sectors show mixed results. The micro-cap segment’s standout performers may attract speculative interest but warrant careful analysis given their scale and volatility.

Overall, the earnings season reinforces the importance of selective stock picking, with mid and small caps offering attractive growth prospects amid a complex macroeconomic landscape.

Investor Takeaways

For investors, the current earnings season underscores the value of diversification across market caps and sectors. Mid-cap companies, particularly in pharmaceuticals and biotechnology, remain compelling due to robust earnings growth and sector tailwinds. Small and micro caps with strong fundamentals and niche market positions also present opportunities for alpha generation.

Large caps, while facing headwinds, should not be overlooked, especially those demonstrating operational improvements and margin expansion, as exemplified by CPCL. Monitoring upcoming results from key large-cap companies will be crucial to gauge the sustainability of earnings recovery.

In summary, the December 2025 quarter earnings reveal a market in transition, with pockets of strength amid broader challenges. Investors who analyse results carefully and focus on quality growth stocks are likely to navigate this environment successfully.

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