India large cap companies: Small and mid-cap firms lag behind large caps in Q1 earnings show – News Air Insight

ET Intelligence Group: Small and mid-cap firms fared poorly during the June quarter results season compared with their large cap counterparts, according to the ETIG analysis of over 3,100 companies. Net profit of small caps continued to slip for the third consecutive quarter, reaching a nine-quarter low growth of 7.5% year-on-year. Profit growth of mid-caps slowed to just 1%, which was the weakest in seven quarters. In contrast, large-cap companies reported a 9.5% rise in net profit, an improvement over the 8.9% growth recorded in the same quarter last year.

The trend was similar in sales performance as large caps reported 6.7% growth, surpassing the 5.2% growth of small-cap firms and 5.7% growth of mid-cap firms.

“Risk-reward is slowly building towards mid and small caps. Nonetheless, recovery will be slow and gradual as we progress towards FY26, led by strong earnings expectations, improving domestic liquidity, and stable Indian macros,” said Neeraj Chadawar, head – fundamental and quantitative research, Axis Securities.

Large caps have also been able to hold on to their profit margins while small and mid-caps have witnessed a declining trend. The aggregate operating margin of large caps stood flat YoY at 30.4% in the June quarter. However, for small caps, it shrunk to 13.3% from 15.3% in the year-ago quarter. Similarly, the operating margin of mid-caps fell to 17.7% from 18.2% by similar comparison.

According to Chadawar, the market needs to sail through another couple of months smoothly before entering a concrete direction of growth.

Experts believe that the Indian market has seen a significant correction in the last two odd months and has re-entered an oversold territory. Foreign investors have been selling off their stocks concerned about the potential impact of new US tariffs on Indian exports. Foreign Portfolio Investors (FPIs) sold a net total of $3.99 billion (₹34,993 crore) in Indian stocks during August.