Quarterly Earnings Trends: A Gradual Upturn

The Dec-2025 quarter saw a marked improvement in the proportion of companies reporting positive earnings, rising to 54.0% from 43.0% in September 2025 and 40.0% in June 2025. This steady upward trend suggests a gradual recovery in corporate profitability after a challenging first half of the fiscal year. The March 2025 quarter had a 44.0% positive result rate, indicating that the December quarter’s performance is the strongest in the last four quarters.

This improvement is particularly encouraging given the macroeconomic headwinds faced by many sectors, including inflationary pressures and global supply chain disruptions. The data suggests that companies are adapting well, with operational efficiencies and cost management playing a key role in boosting bottom lines.

Market Capitalisation Breakdown: Mid Caps Outperform

Analysing results by market capitalisation reveals a clear divergence in performance. Mid-cap stocks led the charge with 61.0% reporting positive results, significantly outperforming large caps, where only 38.0% of companies posted profits. Small caps also showed resilience, with 56.0% positive results, slightly below mid caps but well ahead of large caps.

The underperformance of large caps may reflect their greater exposure to global economic uncertainties and more complex operational structures. Conversely, mid caps appear to be benefiting from nimble management and sectoral tailwinds, particularly in pharmaceuticals and biotechnology.

Sectoral Highlights: Pharmaceuticals and Capital Markets Shine

Among the top performers, Laurus Labs, a mid-cap player in the Pharmaceuticals & Biotechnology sector, delivered an outstanding quarter. The company’s profit before tax (PBT) excluding other income surged by 164.56% to ₹320.80 crores, while profit after tax (PAT) soared 172.7% to ₹251.66 crores. Net sales grew 25.67% to ₹1,778.29 crores, marking the highest quarterly sales in its history. Laurus Labs also reported its highest operating profit to interest ratio at 12.38 times and an operating profit to net sales ratio of 27.00%, underscoring robust operational efficiency.

Debt metrics improved as well, with the debt-equity ratio falling to a low 0.46 times, signalling a strong balance sheet. These results have prompted a mild bullish revision in the company’s outlook, reflecting confidence in sustained growth.

In the small-cap space, Indo Thai Securities from the Capital Markets sector emerged as a top performer, while in the micro-cap category, String Metaverse (Paper, Forest & Jute Products) and Sera Investments (NBFC) posted impressive results, highlighting pockets of strength in niche sectors.

Large Cap Performance: Select Bright Spots Amidst Challenges

Large-cap companies have faced a tougher environment, with only 38.0% reporting positive results this quarter. However, there are notable exceptions such as Piramal Finance, which delivered strong earnings despite sectoral headwinds. The relatively lower positive result ratio among large caps may be attributed to their exposure to cyclical industries and global trade uncertainties.

Investors should monitor upcoming results from major players like Axis Bank Ltd., scheduled to report on 26 Jan 2026, and CG Power & Industrial Solutions Ltd. on 27 Jan 2026, as these will provide further clarity on the large-cap earnings trajectory.

Profit Growth and Quality Metrics: A Closer Look

The aggregate profit growth for the quarter is buoyed by mid and small caps, with several companies reporting record highs in key financial metrics. Laurus Labs’ earnings per share (EPS) reached ₹4.66, the highest on record, reflecting strong profitability and shareholder value creation. Operating profit margins and interest coverage ratios have also improved across several sectors, indicating better cost control and financial health.

Debt reduction remains a priority, with many companies reporting lower debt-equity ratios, which bodes well for credit profiles and future capital expenditure plans. This deleveraging trend is a positive signal for investors seeking quality growth stocks with sustainable balance sheets.

Outlook and Investor Takeaways

The December quarter results suggest a cautiously optimistic outlook for the Indian equity markets. The improving trend in positive earnings, especially among mid and small caps, indicates that corporate India is navigating macroeconomic challenges effectively. However, the subdued performance of large caps warrants vigilance, as these companies often set the tone for broader market sentiment.

Sectoral leaders in pharmaceuticals, biotechnology, and capital markets are likely to remain in focus, given their robust earnings momentum and operational efficiencies. Investors should consider a balanced approach, favouring companies with strong fundamentals, manageable debt levels, and consistent profit growth.

Upcoming earnings announcements from key large-cap companies will be critical in shaping market direction in the near term. Monitoring these results alongside macroeconomic indicators will help investors make informed decisions in a volatile environment.

Summary of Key Earnings Highlights:

• 422 stocks declared results for Dec-2025 quarter with 54.0% positive outcomes.


• Mid caps led with 61.0% positive results, outperforming large caps at 38.0%.


• Laurus Labs posted exceptional growth: PAT up 172.7%, net sales up 25.67%.


• Small caps and micro caps showed pockets of strength in capital markets and NBFC sectors.


• Debt-equity ratios improved, signalling stronger balance sheets across sectors.


• Large caps remain cautious, with key results awaited from Axis Bank and CG Power.

As the earnings season progresses, investors should remain selective, focusing on companies demonstrating sustainable profit growth and operational resilience. The current data underscores the importance of mid and small caps in driving market gains, while large caps require close scrutiny amid ongoing economic uncertainties.

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