Quarterly Earnings Trends Highlight Recovery Momentum

The latest results for the quarter ended December 2025 indicate a clear upward trajectory in earnings quality and growth. The proportion of companies reporting positive results has surged to 67.0%, compared to just 42.0% in September 2025, 40.0% in June, and 44.0% in March. This improvement signals a broad-based recovery across sectors and market capitalisations, reflecting stabilising demand and operational efficiencies.

Large caps, however, have lagged behind with only 34.0% of companies posting positive results, underscoring ongoing challenges in certain heavyweight sectors. Mid caps fared better with 60.0% positive results, while small caps led the charge with an impressive 75.0% of companies reporting earnings beats or growth. This divergence highlights the nimbleness and growth potential of smaller companies in the current economic environment.

Sectoral and Market Cap Performance: Leaders and Laggards

Among large caps, HCL Technologies in the Computers - Software & Consulting sector stood out with robust earnings growth, benefiting from sustained demand in digital transformation and IT services. The company’s results reflected margin expansion and strong order inflows, reinforcing its position as a sector leader.

In the mid-cap space, Bank of Maharashtra, a public sector bank, delivered encouraging results driven by improved asset quality and higher net interest margins. The bank’s strategic focus on retail and MSME segments has started to pay dividends, with credit growth accelerating and provisions declining sequentially.

Small caps were led by Indo Thai Securities Ltd. in the Capital Markets sector, which posted outstanding financial performance for the quarter. The company’s net sales surged by 125.6% to ₹27.71 crores, while profit before tax (excluding other income) soared by 224.8% to ₹22.49 crores. Net profit after tax grew by 218.4% to ₹17.00 crores, marking the highest quarterly figures in its history. Indo Thai Securities’ earnings per share reached ₹13.98, supported by a strong cash position of ₹140.83 crores in cash and equivalents.

Top Small Cap Performers Drive Sectoral Momentum

Besides Indo Thai Securities, other small caps such as Navkar Corporation in Transport Services and Krishna Phosphates in Fertilisers also posted stellar results. Navkar Corporation benefited from improved logistics demand and operational efficiencies, while Krishna Phosphates saw margin expansion due to favourable input costs and steady volume growth.

The strong showing from small caps underscores the resilience of niche sectors and companies with focused business models. Their ability to capitalise on sector-specific tailwinds and maintain disciplined cost structures has translated into superior earnings growth compared to their larger counterparts.

Recent Results and Market Sentiment

In the last 24 hours, 22 companies declared results, with Indo Thai Securities Ltd. again grabbing attention for its outstanding quarterly performance. The company’s MarketsMOJO score improved from 36 to 38 over the past three months, reflecting enhanced financial strength and positive market sentiment. Indo Thai Securities transitioned from a sideways to a mildly bullish technical stance on 12 January 2026 at ₹253.10, signalling growing investor confidence.

Looking ahead, key results to watch include Jio Financial Services Ltd. and HDFC Life Insurance Company Ltd., both scheduled to announce on 15 January 2026. These companies operate in sectors critical to India’s financial ecosystem and their earnings will provide further clarity on sectoral trends and growth prospects.

Aggregate Profit Growth and Market Implications

The aggregate profit growth across the 64 companies reporting this quarter is notably positive, driven primarily by small and mid-cap segments. The improvement in earnings quality and beat ratio suggests that corporate India is navigating macroeconomic headwinds with greater agility. However, the subdued performance among large caps indicates that challenges remain in certain capital-intensive and cyclical sectors.

Investors should note the divergence in market cap performance when constructing portfolios, favouring companies with strong earnings momentum and sectoral tailwinds. The robust results from capital markets, transport services, and fertiliser sectors highlight areas of potential opportunity amid a cautiously optimistic macroeconomic outlook.

Outlook and Strategic Considerations

As the earnings season progresses, market participants will closely monitor upcoming results for signs of sustained recovery or emerging risks. The improving trend in positive results from 40.0% in June 2025 to 67.0% in December 2025 is encouraging, but selective stock picking remains essential given the uneven performance across market caps and sectors.

Companies demonstrating consistent margin expansion, strong cash flows, and prudent capital allocation are likely to outperform. Meanwhile, investors should remain vigilant on macroeconomic indicators and sector-specific developments that could impact earnings sustainability.

Summary

The December 2025 quarter earnings season has delivered a clear message of recovery and resilience, with 67.0% of companies reporting positive results. Small caps have led the charge with a 75.0% positive result ratio, supported by standout performers like Indo Thai Securities Ltd., Navkar Corporation, and Krishna Phosphates. Mid caps also showed strength, while large caps lagged behind, reflecting sectoral challenges. The aggregate profit growth and improving earnings quality bode well for market sentiment, though selective investment remains key amid ongoing economic uncertainties.

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