Mid- And Small-Cap Earnings Show Revenue Strength But Margin Pressure In the December Quarter

Mid- and small-cap companies delivered mixed earnings in the December quarter, with revenue growth holding up across segments while profitability came under pressure due to higher expenses, according to data from the BSE.

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For 99 companies in the BSE MidCap 150 Index, revenue rose 15.5% year-on-year during the December quarter, the fastest pace in four quarters. Net profit growth slowed to 8.5% year-on-year, marking the weakest growth in seven quarters. During the same period, total expenditure increased 16.2% year-on-year, the sharpest rise in 12 quarters, data showed.

The rise in costs weighed on profitability. Aggregate operating profit margins for mid-cap companies declined to around 19.8% in the December quarter, compared with higher levels seen in previous quarters, according to BSE data.

Small-Caps Deliver Higher Profit Growth

In the BSE SmallCap 250 Index, 189 companies reported net profit growth of 14.3% year-on-year in the December quarter, the strongest in three quarters. Revenue growth stood at 10.4% year-on-year, while total expenditure rose 9.5% year-on-year, indicating a slower pace of business expansion compared with mid-cap companies.

Operating margins for small-cap companies declined to 15.04%, the lowest level in eight quarters, reflecting continued pressure from input and operating costs, as per exchange data.

Interest Costs And Sector Trends

Data showed that interest costs for mid-cap companies increased sequentially during the quarter, partly due to higher working capital requirements and the commercialisation of earlier capital expenditure. In contrast, small-cap companies saw a year-on-year decline in interest costs, which supported profit growth despite slower revenue expansion.

Sector-wise performance remained uneven. Companies in metals, oil and gas, and automobiles reported relatively stronger operating performance during the quarter. Information technology, pharmaceuticals, power, airlines, and construction companies reported weaker trends, according to BSE data.

Within the small-cap segment, revenue growth has eased in the real estate and construction industry, whereas some companies in the pharma and chemical sectors face headwinds in pricing and cost pressures. Some companies in the metals and mining segment face commodity price movements, whereas there are some softness in the telecom and technology segments.

Overall, December quarter earnings revealed revenue growth in mid and small caps, while increasing costs continue to impact profitability trends in many sectors.