Small caps lead India Inc. earnings growth in Q3
India Inc.’s earnings momentum remained resilient in Q3 FY26, with small?cap companies posting the strongest growth, a report said on Monday.
The report from Equirus Securities said small caps delivered a robust 22 per cent year?on?year earnings surge, outpacing mid?caps at 15 per cent and large caps at 14 per cent, signalling a broadening of the corporate earnings recovery.
Revenue grew 10 per cent YoY, while EBITDA and PAT rose 14 per cent and 15 per cent respectively, ahead of market expectations, across companies under its coverage, the report said.
Around 36 per cent of companies saw earnings per share (EPS) upgrades, reflecting improving business fundamentals and demand resilience across multiple industries. The upgrades were led by auto, banks & NBFCs, consumer durables, FMCG, and IT, while downgrades were concentrated in building materials, cement, infrastructure, chemicals, realty and retail, the report said.
The trend indicates growing investor confidence and improving forward earnings visibility across market capitalisation segments, it added.
Increasing number of firms from tier 2 and tier 3 towns have been tapping the capital markets, as founders look to grow and scale their businesses, said Ajay Garg, Managing Director, Equirus group.
“Looking into Q4FY26, key monitorable include the pace of NHAI order awards for construction companies, the summer season demand cycle for consumer durables, US market dynamics and RBI rate decisions that could influence BFSI NIM trajectories,” said Maulik Patel, Director & Head of Research, Equirus Securities.
Price hikes and demand momentum in cement offer near-term support, though new capacity additions may pressure utilisation rates, while logistics remains supported by EXIM recovery and Dedicated Freight Corridor (DFC) connectivity improvements, he added.
In the third quarter, financial services companies demonstrated steady asset quality trends and loan growth momentum, while consumption-linked sectors benefited from improving discretionary spending patterns.
Electronic Manufacturing Services (EMS) and IT companies saw sustained deal momentum and execution strength supporting earnings outlooks, the report highlighted.
