Quarterly Earnings Trend Analysis
The December quarter marked a notable inflection point in earnings momentum. With 74.0% of companies reporting positive results, this represents a near-doubling of the positivity rate compared to the September quarter’s 42.0%, and a substantial improvement over June’s 40.0% and March’s 44.0%. This upswing suggests a broad-based recovery in corporate earnings after a period of subdued performance.
However, this aggregate figure masks considerable variation across market capitalisation segments. Large-cap companies reported a modest 34.0% positive result rate, indicating ongoing headwinds for the largest corporates. In contrast, mid-cap stocks delivered a perfect 100.0% positivity rate, signalling robust earnings growth and operational resilience. Small caps also performed strongly, with 79.0% positive results, underscoring their role as growth engines in the current market environment.
Sectoral and Company Highlights
Among large caps, HCL Technologies stood out in the Computers - Software & Consulting sector, delivering results that reinforced its position as a sector leader. Despite the broader challenges faced by large caps, HCL’s performance was a bright spot, reflecting strong demand for IT services and digital transformation initiatives globally.
Mid-cap companies were led by Bank of Maharashtra, a public sector bank that reported robust earnings, benefiting from improved asset quality and higher net interest margins. This performance highlights the gradual stabilisation and recovery in the banking sector, particularly among mid-sized lenders.
Small caps delivered some of the most impressive results, with Indo Thai Securities Ltd. in the Capital Markets sector posting outstanding financials. Indo Thai Securities reported net sales of ₹27.71 crores for the quarter, a remarkable 125.6% growth compared to its previous four-quarter average. Profit before tax (excluding other income) surged by 224.8% to ₹22.49 crores, while profit after tax soared 218.4% to ₹17.00 crores. These figures represent the highest quarterly levels for the company, with EPS reaching ₹13.98 and cash and cash equivalents at a record ₹140.83 crores as of the half-year mark.
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Aggregate Profit Growth and Quality Assessment
The aggregate profit growth for the quarter is heavily influenced by the stellar performances in the mid and small-cap segments. Mid caps, with their 100% positive results, have demonstrated not only top-line growth but also margin expansion and improved asset utilisation. Small caps, while more volatile, have shown pockets of exceptional profitability, as evidenced by Indo Thai Securities and peers like Navkar Corporation in Transport Services and Krishana Phosphates in Fertilisers.
Large caps, however, remain under pressure. The 34.0% positivity rate suggests that many of the blue-chip companies are still grappling with margin pressures, subdued demand in certain sectors, and global macroeconomic uncertainties. This divergence underscores the importance of selective stock picking and sectoral rotation strategies in the current market.
Recent Market Movements and Outlook
Indo Thai Securities’ recent mild bullish shift from a sideways trend on 12 January 2026 at ₹253.10 reflects investor confidence in its robust quarterly performance and improving fundamentals. The company’s MarketsMOJO score improved from 36 to 38 over the past three months, signalling enhanced financial health and operational efficiency.
Looking ahead, investors will closely monitor upcoming results from key players such as HDB Financial Services Ltd, Union Bank of India, and Infosys Ltd, all scheduled to report on 14 January 2026. These results will provide further clarity on sectoral trends and the sustainability of the current earnings momentum.
Given the mixed results across market caps and sectors, a cautious yet opportunistic approach is warranted. Mid-cap and select small-cap stocks appear well-positioned for continued earnings growth, while large caps may require more time to regain robust profitability.
Investment Implications
Investors should consider the strong mid-cap earnings trend as a signal to increase exposure to this segment, which is demonstrating resilience and growth potential. Small caps with clear earnings upgrades and improving fundamentals, such as Indo Thai Securities, offer attractive risk-reward profiles. Conversely, large caps require selective stock selection, focusing on companies with strong balance sheets and secular growth drivers.
Sectoral rotation towards technology, capital markets, and transport services appears justified given the recent earnings outcomes. Meanwhile, traditional sectors like banking are showing signs of recovery but remain vulnerable to macroeconomic shifts.
Upcoming Earnings to Watch:
- HDB Financial Services Ltd – 14 Jan 2026
- Union Bank of India – 14 Jan 2026
- Infosys Ltd – 14 Jan 2026
These results will be critical in assessing whether the positive momentum in mid and large caps can be sustained into the new calendar year.
Conclusion
The December 2025 quarter earnings season has delivered a compelling narrative of recovery and divergence. While mid and small caps have surged ahead with strong earnings beats and margin improvements, large caps continue to face challenges amid a complex macroeconomic backdrop. Investors are advised to focus on quality growth stocks within mid and small caps, while maintaining a selective stance on large caps. The upcoming earnings announcements will be pivotal in shaping market sentiment and guiding portfolio allocation decisions in the near term.
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