Quarterly Earnings Trends: A Gradual Improvement

The proportion of companies reporting positive results has steadily improved over the last four quarters, rising from 40.0% in June 2025 to 55.0% in December 2025. This marks a notable recovery from the subdued performance seen earlier in the year, with September 2025’s 43.0% positive results acting as a transitional phase. The upward trend suggests that corporate earnings are beginning to stabilise amid a complex macroeconomic backdrop.

However, the overall positive result ratio of 55.0% still indicates that nearly half of the companies are struggling to meet expectations, underscoring ongoing challenges such as inflationary pressures, supply chain disruptions, and sector-specific headwinds.

Market Capitalisation Segmentation: Mid Caps Lead the Charge

Breaking down the results by market capitalisation reveals a striking divergence. Mid-cap companies have outperformed their large- and small-cap peers, with 61.0% reporting positive results. Small caps follow closely at 56.0%, while large caps lag significantly at 38.0%. This disparity highlights the resilience and growth potential of mid-sized firms, which often benefit from greater agility and niche market positioning.

Large caps, despite their scale and resources, appear to be facing more pronounced margin pressures and slower top-line growth. This may be attributed to their exposure to mature sectors and global economic uncertainties. Conversely, mid caps such as Laurus Labs in Pharmaceuticals & Biotechnology have demonstrated robust earnings growth, driven by strong demand and operational efficiencies.

Sectoral Highlights and Top Performers

Among large caps, Piramal Finance has emerged as a standout performer, delivering results that surpassed expectations. Its strong credit portfolio and prudent risk management have underpinned steady profit growth despite a challenging credit environment.

Mid caps have been bolstered by companies like Laurus Labs, which continues to capitalise on the growing pharmaceutical demand both domestically and internationally. The company’s focus on research and development, along with capacity expansions, has translated into improved margins and revenue growth.

Small caps such as Indo Thai Securities in the Capital Markets sector have also impressed investors with solid earnings beats, reflecting increased market activity and favourable trading conditions.

Micro caps have delivered some of the most remarkable results, with String Metaverse (Paper, Forest & Jute Products) and Sera Investments (NBFC) posting exceptional profit growth. These companies have leveraged niche market opportunities and operational efficiencies to generate outsized returns relative to their size.

Chennai Petroleum Corporation Ltd: A Sectoral Beacon

In the last 24 hours, Chennai Petroleum Corporation Ltd (CPCL) reported a very positive financial performance for the December 2025 quarter. The company’s PBT excluding other income surged by 244.5% to ₹1,302.39 crores compared to its previous four-quarter average, while PAT grew by 242.5% to ₹1,001.59 crores. Net sales for the half-year reached ₹32,010.51 crores, marking a 27.98% increase.

CPCL’s PBDIT hit a record high of ₹1,477.95 crores, with operating profit to net sales ratio also reaching its peak at 9.42%. Earnings per share for the quarter stood at ₹67.26, the highest recorded by the company. These metrics reflect a significant turnaround from its mildly bullish stance in mid-December 2025, signalling strong operational execution and favourable market conditions in the oil sector.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 428 companies reporting this quarter indicates a cautious but tangible recovery in corporate earnings. The improvement in positive result ratios and the strong performances from mid and small caps suggest that investors may find selective opportunities in these segments.

However, the subdued showing from large caps and the near-even split between positive and negative results overall caution against broad-based optimism. Investors should remain discerning, focusing on companies with robust fundamentals, clear growth drivers, and sectoral tailwinds.

Upcoming results from heavyweight names such as Axis Bank Ltd (due 26 Jan 2026), Asian Paints Ltd (27 Jan 2026), and CG Power & Industrial Solutions Ltd (27 Jan 2026) will be closely watched for further directional cues on market sentiment and earnings momentum.

Outlook and Strategic Considerations

Given the current earnings landscape, a strategic tilt towards mid and small caps with proven growth trajectories and improving profitability appears prudent. Sectors such as pharmaceuticals, capital markets, and select NBFCs have demonstrated resilience and growth potential, making them attractive candidates for portfolio allocation.

Meanwhile, large caps require careful stock selection, favouring those with strong balance sheets and diversified revenue streams to weather macroeconomic uncertainties. The oil sector’s recent performance, exemplified by CPCL, also merits attention as commodity prices and demand dynamics evolve.

Overall, the December 2025 quarter earnings season underscores a market in transition, with pockets of strength amid broader challenges. Investors are advised to analyse results in detail, balancing growth prospects with risk management to capitalise on emerging opportunities.

Summary

The December quarter has delivered a mixed bag of earnings outcomes, with a clear improvement in positive results compared to previous quarters. Mid caps have led the recovery, while large caps lag behind. Sectoral leaders like Piramal Finance, Laurus Labs, and Indo Thai Securities have outperformed, alongside micro caps delivering exceptional returns. Chennai Petroleum Corporation’s stellar quarter highlights the potential in the oil sector. As the market awaits key upcoming results, a selective approach focusing on quality growth stocks remains the recommended strategy.

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