Quarterly Earnings Trend: A Clear Upswing

The December quarter has brought a welcome resurgence in earnings momentum after a subdued performance in the preceding three quarters. The proportion of companies reporting positive results surged to 69.0%, compared to 42.0% in September, 40.0% in June, and 44.0% in March 2025. This improvement reflects a broad-based recovery in corporate earnings, driven by both cyclical factors and sector-specific tailwinds.

Notably, the uplift in positive results is not uniform across market capitalisation categories. Large-cap stocks, traditionally viewed as market bellwethers, reported a modest 34.0% positive result rate, indicating ongoing challenges in some heavyweight sectors. Conversely, mid-cap companies delivered a stellar 100.0% positive result rate, while small caps also posted a robust 75.0%, highlighting the resilience and growth potential in these segments.

Market Cap Wise Performance: Mid Caps Lead the Charge

The stark contrast between large-cap and mid-cap results is a key takeaway from this earnings season. Mid-cap companies, often more agile and growth-oriented, have capitalised on favourable market conditions and sectoral demand to deliver consistent earnings beats. This is exemplified by Indian Renewable, a mid-cap player in the finance sector, which has demonstrated strong financial discipline and growth prospects, contributing to the sector’s overall positive sentiment.

Small caps have also shown impressive resilience, with 75.0% reporting positive results. Indo Thai Securities Ltd, a small-cap stock in the capital markets sector, stands out as a top performer. The company’s December quarter results were exceptional, with net sales surging 125.6% to ₹27.71 crores compared to the previous four-quarter average. Profit before tax (excluding other income) soared by 224.8% to ₹22.49 crores, while net profit after tax grew 218.4% to ₹17.00 crores, marking record highs across key financial metrics.

Sectoral Highlights and Top Performers

Among large caps, HCL Technologies, operating in the Computers - Software & Consulting sector, emerged as a notable performer. Despite the overall subdued large-cap positive result rate, HCL’s earnings demonstrated resilience amid a challenging global IT services environment. The company’s ability to sustain growth and margin expansion has been a key factor in its relative outperformance.

In the small-cap space, alongside Indo Thai Securities, Krishana Phosphates from the fertilisers sector also delivered standout results. Both companies recorded their highest quarterly sales, profits before depreciation, interest and tax (PBDIT), and earnings per share (EPS) in the December quarter, signalling strong operational execution and favourable demand conditions.

Indo Thai Securities Ltd: A Case Study in Earnings Excellence

Indo Thai Securities Ltd’s December quarter performance is particularly instructive for investors seeking growth opportunities in the capital markets sector. The company’s net sales of ₹27.71 crores represent a 125.6% increase over its previous four-quarter average, while profit before tax (excluding other income) at ₹22.49 crores surged 224.8%. Net profit after tax of ₹17.00 crores was up 218.4%, with all key profitability metrics reaching record highs.

Additionally, the company’s cash and cash equivalents stood at ₹140.83 crores for the half year, the highest on record, underscoring a strong liquidity position. Indo Thai Securities’ financial score improved from 36 to 38 over the past three months, reflecting enhanced operational efficiency and market positioning. The stock’s mild bullish technical stance since 12 January 2026 at ₹253.10 further supports a positive outlook.

Upcoming Earnings to Watch

Market participants will closely monitor the results of several key companies scheduled to report shortly. HDB Financial Services Ltd and Union Bank of India are set to announce their December quarter earnings on 14 January 2026, followed by Infosys Ltd, a major IT sector bellwether. These results will provide further clarity on sectoral trends and the sustainability of the current earnings momentum.

Implications for Investors and Market Outlook

The December quarter earnings season highlights a bifurcated market environment where mid and small caps are driving growth, while large caps face ongoing headwinds. This divergence suggests investors may benefit from a more nuanced allocation strategy, favouring growth-oriented mid and small caps with strong earnings visibility and sector tailwinds.

However, caution remains warranted given the uneven recovery across sectors and the modest positive result rate among large caps. Investors should continue to monitor upcoming earnings releases and macroeconomic indicators to gauge the durability of the current earnings upswing.

Overall, the improved earnings landscape, led by mid and small caps, provides a constructive backdrop for equity markets in early 2026, with selective stock picking likely to yield the best risk-adjusted returns.

Summary

The December 2025 quarter earnings season has delivered a significant improvement in corporate profitability, with 69.0% of companies reporting positive results. Mid-cap stocks led the charge with a 100.0% positive result rate, followed by small caps at 75.0%, while large caps lagged at 34.0%. Standout performers include Indo Thai Securities Ltd and Krishana Phosphates among small caps, and HCL Technologies in the large-cap IT sector. Upcoming results from HDB Financial Services, Union Bank of India, and Infosys will be critical in shaping near-term market sentiment. Investors are advised to focus on growth-oriented mid and small caps while remaining vigilant on large-cap earnings trends.

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