Quarterly Earnings Overview and Trend Analysis

The latest results season has underscored a clear upward trajectory in earnings momentum. The proportion of companies reporting positive results has climbed steadily over the last four quarters: from 44.0% in March 2025, 40.0% in June, 42.0% in September, to a robust 67.0% in December 2025. This improvement signals a broad-based recovery in corporate earnings, reflecting easing input costs and stabilising demand conditions across sectors.

However, this aggregate figure masks significant divergence when analysed by market capitalisation. Large cap companies have reported a relatively subdued positive result ratio of 34.0%, indicating ongoing headwinds for blue-chip firms. In contrast, mid cap companies have delivered a perfect score, with 100.0% positive results, while small caps have also performed strongly at 73.0%. This disparity suggests that smaller and mid-sized firms are currently better positioned to capitalise on emerging growth opportunities and operational efficiencies.

Sectoral and Company-Specific Highlights

Among large caps, HCL Technologies has stood out as a top performer within the Computers - Software & Consulting sector. The company’s results reflect resilient demand for IT services and digital transformation projects, which have helped offset margin pressures from wage inflation and currency fluctuations.

In the mid cap space, Indian Renewable has emerged as a sectoral leader in Finance, showcasing strong asset quality and robust loan growth. The company’s ability to maintain healthy net interest margins and control credit costs has been pivotal in its positive earnings trajectory.

Small caps have been led by Krishana Phoschem Ltd, a Fertilizers sector company that has delivered outstanding financial performance for the December 2025 quarter. The company reported net sales of ₹659.11 crores, representing 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 high of ₹5.39, underscoring strong operational leverage and efficient cost management.

Krishana Phoschem’s balance sheet remains robust, with a low debt-to-equity ratio of 0.93 times and an impressive debtors turnover ratio of 4.20 times, indicating effective working capital management. Despite a slight downgrade in its mojo score from 32 to 31 over the past three months, the company’s fundamentals remain solid, reflecting sustained demand in the fertiliser segment and favourable commodity price trends.

Market Capitalisation Impact and Investor Implications

The stark contrast in earnings outcomes across market cap segments warrants close attention from investors. Large caps, despite their scale and diversification, appear to be grappling with margin pressures and slower revenue growth, possibly due to global economic uncertainties and sector-specific challenges. This has resulted in a modest 34.0% positive result ratio, signalling caution for portfolio allocations heavily weighted towards blue-chip stocks.

Conversely, mid cap companies have demonstrated exceptional resilience and growth potential, with a 100.0% positive result ratio. This cohort is benefiting from nimble business models, sectoral tailwinds, and often less exposure to global headwinds. Small caps, with a 73.0% positive result ratio, also present compelling opportunities, particularly in sectors such as fertilisers and niche manufacturing, where companies like Krishana Phoschem are capitalising on strong domestic demand and operational efficiencies.

Investors should consider these dynamics carefully, balancing the stability of large caps with the growth prospects of mid and small caps. The current earnings season suggests a tactical tilt towards mid and small cap stocks could enhance portfolio returns, albeit with a commensurate risk assessment.

Upcoming Earnings to Watch

Market participants will be closely monitoring the results of key companies scheduled to report shortly, including HDB Financial Services Ltd, Union Bank of India, and Infosys Ltd on 14 January 2026. These results will provide further clarity on sectoral trends, credit conditions, and IT services demand, potentially influencing market sentiment and sector rotation strategies.

Conclusion: Earnings Season Signals Gradual Recovery with Selective Strength

The December 2025 quarterly earnings season paints a cautiously optimistic picture for Indian equities. The overall improvement in positive results to 67.0% reflects a gradual recovery in corporate profitability, supported by easing cost pressures and stabilising demand. However, the divergence between large, mid, and small caps highlights the importance of selective stock picking and sectoral analysis in the current environment.

Companies like Krishana Phoschem exemplify the potential for strong earnings growth in specialised sectors, while mid cap financials such as Indian Renewable demonstrate robust fundamentals. Large caps, including HCL Technologies, continue to deliver steady results but face challenges that may temper near-term upside.

Investors should remain vigilant, analysing quarterly results in detail to identify sustainable growth stories and manage risk effectively amid evolving macroeconomic conditions.

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