Quarterly Earnings Trends: A Clear Upswing

The latest earnings data for the December 2025 quarter indicates a strong rebound in corporate results compared to the preceding three quarters. The proportion of companies reporting positive earnings has surged to 70.0%, up from 42.0% in September 2025, 40.0% in June 2025, and 44.0% in March 2025. This improvement signals a broad-based recovery in profitability across sectors, driven primarily by mid and small cap companies.

Large cap companies, however, have lagged behind with only 34.0% delivering positive results, suggesting that the market leaders are facing headwinds possibly linked to global economic uncertainties and sector-specific challenges. In contrast, mid and small caps have each posted a robust 75.0% positive result rate, underscoring their resilience and growth potential in the current environment.

Market Capitalisation Breakdown: Mid and Small Caps Shine

The disparity in earnings performance across market capitalisation segments is noteworthy. Mid cap stocks have emerged as the standout performers, buoyed by strong operational execution and favourable sectoral tailwinds. Bank of Maharashtra, a public sector bank, has been a key contributor in this segment, demonstrating improved asset quality and higher net interest margins that have translated into better profitability.

Small cap stocks have also delivered exceptional results, with Indo Thai Securities Ltd. leading the charge in the capital markets sector. Indo Thai Securities reported net sales of ₹27.71 crores for the quarter, reflecting a remarkable 125.6% growth compared to its previous four-quarter average. Profit before tax (excluding other income) soared by 224.8% to ₹22.49 crores, while profit after tax surged 218.4% to ₹17.00 crores. These figures represent the highest quarterly marks for the company across key metrics including PBDIT, EPS, and cash reserves, signalling robust operational momentum and strong cash flow generation.

Sectoral Highlights and Top Performers

Among large caps, HCL Technologies has stood out in the Computers - Software & Consulting sector, maintaining steady growth despite a challenging macroeconomic backdrop. The company’s ability to secure new contracts and manage costs effectively has helped it sustain profitability, although the overall large cap segment remains cautious.

In the mid cap space, Bank of Maharashtra’s performance has been bolstered by improving credit demand and prudent risk management, which have contributed to a healthier balance sheet and stronger earnings. This has helped the bank secure a positive rating upgrade from analysts, reflecting confidence in its near-term growth trajectory.

Small cap leaders Indo Thai Securities, Navkar Corporation (Transport Services), and Krishana Phosphates (Fertilizers) have all posted outstanding results, driven by sector-specific demand and operational efficiencies. Navkar Corporation has benefited from increased freight volumes and improved logistics infrastructure, while Krishana Phosphates has capitalised on rising fertiliser demand amid favourable government policies and commodity price trends.

Financial Metrics and Quality Assessments

Indo Thai Securities’ financial performance exemplifies the quality and growth potential seen in many small cap companies this quarter. The company’s earnings per share (EPS) reached ₹13.98, the highest quarterly figure recorded, while cash and cash equivalents surged to ₹140.83 crores at half-year end, underscoring strong liquidity and balance sheet health. Such metrics have led to an improved Mojo Score of 38, up from 36 three months prior, reflecting enhanced financial strength and operational efficiency.

Similarly, Navkar Corporation and Krishana Phosphates have demonstrated consistent earnings growth and margin expansion, supported by sector tailwinds and effective cost management. These companies have received positive analyst ratings, with upgrades reflecting confidence in sustainable profitability and cash flow generation.

Market Outlook and Upcoming Earnings

Looking ahead, investors will closely monitor the earnings announcements of key upcoming companies such as Jio Financial Services Ltd and HDFC Life Insurance Company Ltd, both scheduled to report on 15 January 2026. These results are expected to provide further clarity on sectoral trends in financial services and insurance, which have shown mixed signals in recent quarters.

The overall earnings season suggests a cautiously optimistic outlook, with mid and small caps driving market momentum while large caps navigate a more complex environment. Investors are advised to focus on companies demonstrating strong fundamentals, robust cash flows, and sectoral advantages to capitalise on the evolving market dynamics.

Conclusion: Earnings Season Signals Selective Strength

The December 2025 quarter earnings season has underscored the resilience of mid and small cap companies in India’s equity markets. With 75.0% of these companies reporting positive results, the segment continues to offer compelling opportunities for investors seeking growth and value. Large caps, while facing challenges, still present pockets of strength, particularly in technology and banking sectors.

Quality metrics such as earnings growth, cash generation, and operational efficiency remain critical in differentiating winners from laggards. As the market digests these results, a selective approach focusing on fundamentally strong companies with clear growth catalysts is likely to yield favourable outcomes in the near term.

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