Quarterly Earnings Overview and Trends
The latest results season, covering the December 2025 quarter, saw 25 companies declare their financials. The proportion of companies reporting positive earnings growth surged to 70.0%, a notable improvement compared to the preceding three quarters where positive results hovered between 40.0% and 44.0%. This quarter’s uplift signals a potential inflection point in corporate earnings momentum after a period of subdued performance.
Breaking down by market capitalisation, the divergence is stark. Large cap companies reported no positive earnings growth this quarter, a surprising development given their historical stability. Conversely, mid cap stocks delivered a flawless performance with 100.0% positive results, while small caps also impressed with 75.0% of companies beating expectations. This pattern suggests that investors seeking growth opportunities may find more compelling prospects outside the large cap universe at present.
Sectoral and Company Highlights
Among large caps, Avenue Supermarts, operating in the diversified retail sector, stood out as the top performer. Despite the overall lack of positive results in this category, Avenue Supermarts demonstrated resilience, reflecting the sector’s gradual recovery and consumer spending uptick. The company’s ability to navigate inflationary pressures and supply chain challenges has been pivotal to its relative outperformance.
Mid cap stocks were led by Indian Renewable Energy Development Agency, a finance sector player, which showcased robust earnings growth driven by increased financing activities in the renewable energy space. The company’s strategic positioning in a high-growth sector and favourable policy tailwinds have translated into strong profitability and investor confidence.
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Small cap stocks were led by Krishana Phoschem Ltd, a fertiliser sector company, which delivered an outstanding financial performance for the quarter ended December 2025. The company reported net sales of ₹659.11 crores, reflecting a remarkable growth of 116.79% year-on-year. Profit before tax (excluding other income) surged by 91.68% to ₹52.27 crores, while profit after tax rose 62.3% to ₹33.32 crores. Earnings per share reached a quarterly high of ₹5.39, underscoring the company’s strong operational leverage and efficient cost management.
Krishana Phoschem’s balance sheet also remains robust, with a low debt-to-equity ratio of 0.93 times as of the half-year mark, indicating prudent financial management. The company’s debtor turnover ratio improved to 4.20 times, the highest in recent quarters, signalling enhanced collection efficiency. Despite a slight downgrade in its sentiment from bullish to mildly bullish on 1 January 2026, the fundamentals remain solid, positioning it well for sustained growth.
Aggregate Profit Growth and Market Implications
The aggregate profit growth across the 25 companies reporting this quarter reflects a broad-based recovery, particularly among mid and small caps. The 70.0% positive result ratio contrasts sharply with the subdued earnings environment of the previous quarters, suggesting that corporate India is gradually overcoming headwinds such as inflation, input cost pressures, and global economic uncertainties.
However, the absence of positive earnings growth among large caps is a cautionary signal. It may indicate that the largest companies, often more exposed to global trade dynamics and cyclical sectors, are still grappling with margin pressures and demand softness. Investors should therefore adopt a discerning approach, favouring mid and small cap opportunities that are benefiting from domestic demand revival and sector-specific tailwinds.
Upcoming Earnings to Watch
Market participants will closely monitor the earnings announcements of several key companies scheduled for 13 January 2026. These include ICICI Prudential Life Insurance Company Ltd, Tata Elxsi Ltd, and Bank of Maharashtra. Their results will provide further clarity on sectoral trends in financial services, technology, and banking, respectively, and could influence market sentiment heading into the new calendar year.
Outlook and Strategic Considerations
Given the current earnings landscape, investors may consider increasing exposure to mid and small cap stocks demonstrating strong fundamentals and earnings momentum. The renewable energy and fertiliser sectors, as exemplified by Indian Renewable and Krishana Phoschem, offer compelling growth narratives supported by favourable policy frameworks and rising demand.
Conversely, large cap investors should remain selective, focusing on companies with resilient business models and pricing power to withstand ongoing macroeconomic challenges. The mixed results underscore the importance of rigorous fundamental analysis and sectoral diversification in portfolio construction.
Key Takeaways:
- 70.0% of companies reported positive earnings in Dec-2025, up from 42.0% in Sep-2025.
- Mid caps led with 100.0% positive results; small caps followed at 75.0%, while large caps lagged at 0.0%.
- Krishana Phoschem delivered exceptional growth with net sales up 116.79% and PAT up 62.3%.
- Sectoral strength seen in diversified retail, finance, and fertilisers.
- Upcoming results from ICICI Prudential Life, Tata Elxsi, and Bank of Maharashtra will be closely watched.
In summary, the December quarter earnings season has highlighted a bifurcated market with mid and small caps driving growth while large caps remain challenged. This dynamic presents both opportunities and risks for investors navigating the evolving economic environment in early 2026.
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