Midcaps, Smallcaps Poised for Strong December Quarter Earnings Growth

• Midcap and Smallcap companies are projected to report robust earnings in the December quarter, with Smallcap growth partly attributed to a low base.
• Elara Capital forecasts Midcap profit after tax to grow 16% year-on-year, driven by Real Estate (291%), Industrials (57%), Cement (44%), Energy (39%), Auto (35%), and Midcap IT (30%).
• Smallcaps are expected to achieve 30% year-on-year profit after tax growth in Q3FY26E, outperforming mid and large caps, supported by Cement, Real Estate, Auto, and Utilities.
• However, Building Materials, Banks, and Metals in Midcaps, and Transportation, IT Services, and Banks in Smallcaps, may see flat to negative growth.
• Experts like Shibani Kurian (Kotak AMC) and Mittul Kalawadia (ICICI Prudential AMC) note strong midcap earnings momentum but caution on elevated valuations and the low base effect for smallcaps.

Why It Matters: Midcaps and Smallcaps anticipate strong December quarter earnings, though valuations remain elevated, especially for Smallcaps.