Segment-wise look at key FY25 earnings trends

Nifty 500 companies demonstrated resilience in FY25, with net sales, EBITDA, and PAT growing by 5%, 8%, and 6% YoY, respectively. The standout performance came in Q4, which marked a strong rebound after a period of earnings slowdown earlier in the year. This recovery highlights the adaptability of India’s corporate sector despite global uncertainties.

Source: Capital Line, Note: EBITDA margins mentioned are ex-BFSI across

Mid-cap and small-caps continue to outperform large-caps in PAT growth.

Source: Capital Line

This outperformance was driven by:

• More agile operations, increased domestic focus, and stronger alignment with India’s economic recovery.

• Easing inflation also helped performance. Smaller companies benefit more quickly, as the operating leverage effect accelerates their earnings growth.

• Mid-caps have also been early movers into emerging industries such as solar, electronic manufacturing, data centers, and semiconductors. While large-cap companies have also ventured into these sectors, the impact on their earnings has been muted due to their larger base.

SMIDs have outperformed largecap peers in 15 out of 19 sectors basis FY25 PAT growth:

Source: Capital Line. *NA means there is no PSU bank in smallcap segment. PAT means Adjusted PAT

What drove FY25 sectoral earnings: a segment-wise deep dive A detailed examination of the provided earnings data for FY25 reveals distinct pockets of strength across various sectors and market capitalisation segments.

Automobiles:

• FY25 performance: Large-caps like M&M and Maruti outperformed, driven by strong export traction and CNG portfolio expansion. Bajaj Auto led the EV narrative. Mid- and small-caps underperformed due to limited product range, weaker pricing power, and rising input cost sensitivity.

• Competitive dynamics: While mid- and small-caps were early movers in EVs, large-caps quickly scaled up, intensifying pressure on smaller players—especially in auto ancillaries.

• FY26 outlook: OEMs expect sub-5% growth for PVs/CVs, with 6–7% for 2Ws and high single-digit growth in tractors supported by rural demand. Margin pressure may rise from Q1FY26 due to input cost uptick and global demand uncertainty for ancillary exports.

Banks - Private:

• FY25 performance: Mid-caps outpaced large-caps s they focused on niche markets and regional lending, benefiting from better asset quality and targeted credit growth. Large-caps lagged due to cautious lending to manage credit-to-deposit ratios.

• Macro & strategy: Q4FY25 saw stability in asset quality, but stress persisted in unsecured loans. Mid-caps used their agility to deepen penetration, while large-caps prioritised balance sheet discipline.

• FY26 Outlook: NII growth and margins may remain subdued in H1FY26 due to high funding costs but could recover in H2 as rate cuts feed through.

Insurance:

• FY25 performance: Large-caps led the pack, supported by strong distribution and diversified portfolios.

• Growth drivers: General insurance struggled with muted infra capex and motor sales. Life insurers saw Value of New Business (VNB) margin gains via retail protection and annuity focus .

• FY26 outlook: Growth expected from rising insurance penetration, new product rollouts, and a rebound in infrastructure activity boosting general insurance demand.

NBFCs:

• FY25 performance: Large-caps showed steady growth due to diversification. Mid-caps outperformed, aided by focused lending and better asset quality controls. Small-caps however declined sharply, hit by exposure to stressed segments and funding constraints, especially in microfinance.

• Key headwinds: Weak government capex hurt CV financing; asset quality weakened across most players except power financiers and select HFCs.

• FY26 outlook: Recovery will depend on consumption revival, funding availability, and asset quality stabilisation—especially in CV and unsecured lending segments.

Capital Goods:

• FY25 performance: Mid-caps outperformed on strong domestic order inflows linked to renewables, infra, and PLI-linked sectors.

• Growth drivers: Focus on high-growth verticals (T&D, renewables, data centers) and operating leverage helped mid-caps scale faster. Small-caps, despite decent growth, likely faced limitations in project size or execution capacity compared to mid-caps.

• FY26 outlook: With sustained government capex, continued momentum in power and infra, and improving execution cycles, mid-caps remain well-placed to drive double-digit earnings growth.

Cement:

• FY25 performance: FY25 was a weak year for cement as all segments saw contraction.

• Key drivers: Despite demand improving in the last quarter, the sector faced intense competition and supply pressure from significant capacity additions by top players

• FY26 outlook: Overall, the outlook for FY26 remains constructive, but, competitive intensity and pricing discipline will be key variables to watch.

Chemicals:

• FY25 performance: Mid-cap outperformance was driven by specialisation in high-margin, niche segments like specialty chemicals, coupled with strong domestic demand.

• Headwinds and divergence: Large-caps dealt with export market softness and pricing volatility, while small-caps struggled with underutilisation and weak pricing power.

• FY26 Outlook: Management expects volume-led growth from resilient domestic demand, softening input costs, and incremental capacity coming online.

Consumer:

• FY25 performance: Mid-caps outperform on stronger rural reach, agility in product innovation, and sharper value positioning.

• Divergence drivers: Large and mid-caps benefited from value-added offerings and backward integration, shielding margins amid cost inflation, while small-caps lacked pricing power and scale.

• FY26 outlook: Management commentary signals optimism, with stable pricing, rural demand recovery, and cost normalisation expected to drive steady revenue and earnings growth.

Consumer Durables:

• FY25 performance: SMIDs outperformed their large-cap peers, driven by strong exposure to cables & wires (C&W), EV infra, and industrial projects.

• Divergence drivers: Mid-caps capitalised on government capex, power, and metro projects with nimble execution. Large-caps and small-caps, with greater cooling appliance exposure, saw muted demand due to erratic summer onset.

• FY26 outlook: With sustained infrastructure push, EV rollout, and building automation demand, mid-caps in project-linked categories remain well-placed to sustain momentum.

Healthcare:

• FY25 Performance: Small-caps outpaced others, led by focused plays in diagnostics, single-specialty hospitals, and niche pharma.

• Growth drivers: Rising demand for chronic care (diabetes/obesity), improving hospital occupancy, and tech-enabled healthcare delivery boosted earnings.

• FY26 Outlook: Chronic therapies, expanding diagnostics, and higher insurance penetration—driven by affordability and tech—are expected to sustain sector growth.

Infrastructure:

• FY25 Performance: Mid-caps capitalised on new project wins in roads, renewables, and data centers, with faster execution and high operating leverage.

• FY26 Outlook: With government spending picking up in H2FY25, earnings visibility for large players may improve in FY26 as execution accelerates.

Logistics:

• FY25 performance: Small-caps surged by capitalising on untapped organised market, niche segments like express delivery and warehousing, amid subdued e-commerce volumes and broader spending slowdown which impacted large and midcap players

• FY26 outlook: Sector growth expected to improve with easing fuel costs, GST tailwinds, Dedicated Freight Corridor rollouts, and rising formalisation—benefiting agile players and organized logistics networks.

Metals:

• Segment performance: Large-cap players outperformed significantly due to their integrated operations (from mining to finished products) and economies of scale, allowing them to capitalise on favorable commodity price cycles and robust demand from infrastructure and manufacturing, offsetting global uncertainties.

• FY26 outlook: Management believes that global uncertainties might pose challenges to international steel, base metal, and raw material prices in the short term.

Oil & Gas:

• FY25 performance: Earnings declined across the board due to normalisation of refining margins from FY24 highs, global crude volatility, and weak power-led fuel demand.

• FY26 outlook: With continued capex in refining and distribution, margin pressures may persist. Transition toward renewables and EVs poses strategic risks for traditional players, especially those with large upstream or refining footprints.

Real Estate:

• Segment performance: The overall sector is could be seeing a a revival driven by robust housing and commercial property demand. Small-cap real estate companies significantly outperformed due to their agility in focusing on specific micro-markets or affordable housing projects.

• FY26 outlook: Average growth in price realization was 15% in FY25, with a similar increase expected going forward. Approval processes are gradually improving, paving the way for a healthier launch pipeline in FY26

Retail:

• FY25 performance: Large-caps posted muted growth dragged by a weak QSR segment, while mid-caps were led by jewellery-driven sales and agile omnichannel strategies.

• FY26 Outlook: The sector may benefit from improving consumer sentiment, but margin pressures and selective category growth (especially in jewelry and affordable fashion) will determine outperformance.

Technology:

• Segment performance: While macroeconomic challenges weighed on demand for large caps, with discretionary spending stalling, the BFSI vertical remained resilient. Mid-cap and Small-cap IT companies outperformed by specialising in niche services (e.g., cloud, AI, cybersecurity) or specific industry verticals like BFSI. T

• FY26 outlook: With continued focus on cost optimisation, stable deal inflows, and early signs of demand stabilisation in select verticals, management teams are hopeful of a better growth trajectory as FY26 progresses.

Telecom:

• Segment performance: Large-caps grew by an exceptional 222.1% as the Indian telecom market has consolidated into a near duopoly dominated by large players who command significant pricing power.

• FY26 outlook: The outlook is broadly constructive due to benefits of tariff hikes, increased subscribers on longer-duration plans, and significant investments in 5G rollout and higher pricing from high data consuming users.

Parting thought

Mid- and small-cap companies outpaced large-caps in both earnings and opportunity capture across multiple sectors. Their agility, niche focus, and domestic alignment helped navigate global volatility better.

While large-caps offer consistency, SMIDs have become the growth engine of Indian earnings