The Q3 earnings season has largely met expectations, with strong performance in mid and smallcap companies, according to market experts. In a discussion with ET Now, Vikas Khemani, from Carnelian Asset Management, highlighted that the earnings momentum remains intact.

“Now, we have been saying in our previous discussion, in our previous interaction that we have been very positive on the earnings outlook and that is what has happened, in last two quarters sequentially earnings have been better. So, by and large earnings have been in line with the expectations and even especially in the mid and smallcap space earnings have been very good and nothing changes from our perspective. We think this momentum will continue,” Khemani said.

He added that recent resolutions in the US trade deal and tariff uncertainties have further bolstered corporate confidence, especially among exporters in the mid and smallcap space.

Reflecting on the broader market outlook for 2026, Khemani expressed optimism. “I have said in our previous discussion that 2026 would be a better year than 2025 for the simple reason. If you see, we started 2025 with a lot of negativity or noise or negative news… When all these things were happening, India was going through a significant monetary stimulus as well as the fiscal stimulus and that was obviously working very well at the economic level. There was uncertainty around a little bit of on the export due to tariffs which also has got lifted. Also, in this crisis what India has been able to do is FTAs, long pending FTAs with the other countries, likes of EU and the New Zealand and other parts of the world. So today, we are sitting on a situation where you have good monetary and economic stimulus and all the broader uncertainties are behind. There will always be uncertainty in the market something or other, there is no doubt on that, but broadly there is not much uncertainty on the growth and as more and more people get comfortable around this environment and meanwhile in this period the valuations have come down, a lot of froth which has got kind of cleared, so you will see markets doing well. Now, how much it does well it all depends a lot more on the liquidity which I think should get better this year especially from the foreign investor perspective. So, I am quite optimistic about the market in 2026.”

When asked about the lagging mid and smallcap sectors, Khemani explained that recovery typically starts with largecaps before extending to smaller companies. “It always happens that once the recovery happens it always led by the largecaps and the mid and smallcap follows through… A) they tend to accelerate. I mean, the volatility in the earning with the change in the macro environment generally tends to be far more pronounced than in any largecap or large company and that happens in the share prices as well. So, I am quite optimistic that this environment is going to be good for mid and smallcap. Now whether it really meaningfully picks up in two months, three months, six months, I do not know but directionally we are finding interesting ideas, risk-reward looks very good.”

On investment strategy, Khemani emphasized stock-specific valuations rather than broad index levels. “See, looking at the broad indices cannot be the right answer, you have to look at individual stock specific and you have to see in the context of the potential growth… So, always you have to see valuation in the context of the growth and the ROEs business model company generates and that is how we always evaluate, we do not get carried away by the broader noise and you have seen over the years how our stock picks have been… we have never believed only in the consensus calls, we have taken contra… I mean against the consensus calls but once we are convinced about the potential growth and the risk-reward of the story, then we do take the sizable bets.”
Khemani also discussed the consumption sector, highlighting selective exposure in consumer discretionary stocks, automobiles, and auto ancillaries. “Like I said that it is linked to the macro environment which we saw last 12 to 18 months and with that lag it happened… in last six-eight months we have meaningfully kind of played that out especially in a consumer discretionary space, even automobiles we take as part of the consumption and that we have fairly large exposure… you look at companies, what are the growth drivers, you do not necessarily play only the first order impact, you can play also second order impact where you understand the risk-reward given the valuations.”Looking ahead, Khemani confirmed a focus on mid and smallcaps within his portfolio. “We have product which is more mid and smallcap focused, we have flexicap product where we are definitely right now almost 60% mid and smallcap… Some of the spaces which could stand out in this year would be chemicals… Auto, auto components look pretty decent. The building materials product looks very decent. So, consumer discretionary space you can find lots of ideas. Within banking and financial services you are finding… we think that is more likely to play out. So again, you look at different-different segments… line towards AI related enabled companies, there we are kind of playing out more.”

With optimism around earnings, macro stability, and selective sector plays, experts like Khemani suggest that 2026 could offer better opportunities for investors, particularly in mid and smallcap spaces, while staying alert to market volatility.

Growing numbers of Scottish spirits producers are showing signs of financial strain as weakening export demand, rising costs and trade barriers squeeze margins across the sector.

Research by restructuring specialist BTG Begbies Traynor found that 69 Scottish distillers were facing “significant” or “critical” financial distress at the end of the year, up from 49 in the previous quarter.

According to the Scotch Whisky Association, Scotland is home to more than 150 whisky distilleries, alongside more than 90 producing gin and a smaller number making vodka, rum and liqueurs.

Thomas McKay, managing partner of BTG in Scotland, said producers were facing a “perfect storm of lowering demand, rising production costs and increased tariffs in key markets”.

Exports to the United States and China, two of Scotch whisky’s most important markets, have been dented by tariffs and duties, while domestic trends have also shifted.

Several UK pub groups have reported that customers are increasingly trading down from spirits to cheaper alternatives such as beer or soft drinks. At the same time, broader societal changes, including declining alcohol consumption among younger consumers, have weighed on volumes.

McKay noted that demand for Scotch whisky and gin peaked during the pandemic in 2020, when lockdown consumption surged both in the UK and internationally.

“When that demand fell away, the resulting oversupply pushed prices down, just as additional export costs to the US began to rise sharply,” he said.

Distillers have also been hit by steep increases in energy and labour costs over the past two years, further eroding profitability.

The challenges have already prompted retrenchment. Last month, craft brewer BrewDog announced plans to close its distillery and spirits arm, underscoring the pressure across the wider drinks sector.

The strain is not confined to Scotland. Export volumes of French wine and spirits fell last year to their lowest level in 25 years.

Industry body FEVS said shipments dropped 3 per cent year-on-year to 168 million cases, the weakest performance since the turn of the century. The value of sales declined 8 per cent to €14.3 billion, the poorest showing on that measure for five years.

Tariffs imposed by the United States under President Trump, as well as duties in China, were cited as key headwinds.

Gabriel Picard, chairman of FEVS, said that new trade agreements between the European Union and India, as well as Mercosur countries in South America, could help support exports in the year ahead. However, he warned that sales of cognac and wine to the US and China could deteriorate further.

For Scotland’s distillers, the coming year is likely to test resilience. With costs elevated, export markets volatile and domestic consumers tightening belts, the industry that has long been one of Britain’s flagship exporters is confronting one of its most challenging trading environments in decades.

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Apollo Hospitals posted robust quarterly results, driven by strong revenue growth across its healthcare and pharmacy businesses. The company reported a revenue of ₹6,477 crores, marking a 17% increase, which translated into an EBITDA of ₹965 crores—a 27% improvement. Net profit rose 35% to ₹502 crores, reflecting the impact of higher volumes in high-end specialties and operational efficiency.

Dr Suneeta Reddy, MD of Apollo Hospitals, highlighted the hospital segment’s performance: “Hospital did very well. A growth of 14% in revenues with a revenue of ₹3,183 crores, EBITDA at ₹790 crores representing a 17% increase in EBITDA and profits for the hospital of ₹422 crores representing a 21% improvement in profit.”

Occupancy rates for the quarter stood at 67.1%, slightly below expectations. “There was a 4% improvement in ALOS, which meant that we came down to 3.14 days. If we had been at four days ALOS, we would technically have been at 72% occupancy. So, we have carefully managed to reduce average length of stay to enable patients to really go home faster and to reduce their bills,” said Dr Reddy.

Apollo’s expansion plans remain aggressive. During the quarter, the company opened 100 beds in Pune and 40 beds in Defence Colony. By the first quarter of the next fiscal year, Apollo expects to open 1,035 beds across several new facilities, including Belenus Hospital in Sarjapur (Bangalore), Sonarpur (Kolkata), and Sandhya Elite (Hyderabad), with further expansion planned in Gurgaon.

Regarding profitability, Dr Reddy explained the company’s margin performance: “If you look at healthcare services, we are at a very healthy 24.8%. Apollo Health and Lifestyle is at 10.2%. They have grown their EBITDA margin by 141 basis points. Apollo Healthco is at 4.5%, but that is a different retail business. Offline pharmacies are at 7.8%.”

The pharmacy segment continues to grow strongly, with Healthco adding 185 physical pharmacies this quarter, bringing the total to 7,113—the largest pharmacy network in India. “They have a private label share of 15.53%, which is giving them the margin of 7.8, a very healthy margin, which has improved by 12 basis points. The offline continues to grow with the GMV of ₹525 crores for the quarter, and they have three sources of revenue—insurance, doctor consult, diagnostics, and delivering pharmaceutical products at home—all of them growing at somewhere 23% but growing strongly at 20%,” she added.
The company’s Health and Lifestyle business, despite being loss-making, showed strong growth with a 20% revenue increase and a 39% jump in EBITDA. Dr Reddy expects the segment to turn profitable in the next quarter: “If you look at the different lines of the business, they are all profitable. A little bit of focus on admin costs, etc., they should be profitable, and they are growing the diagnostics scale, which is giving them a healthy 10.8% margin. That margin trajectory will grow.”On the international front, Apollo is focusing on project work and consultancy rather than setting up hospitals overseas. “We have got about ₹20 crores of revenue from the work that we do and project in,” Dr Reddy noted.

Apollo’s capital expenditure plan for expansion includes 1,385 new beds at an estimated cost of ₹2 crores per bed, totaling ₹3,000 crores for the current phase, with another ₹3,000 crores planned for the next phase. Regarding other business verticals, Dr Reddy said: “Healthco is now, it will become a separate company. It is fully capitalised, requires no further capital. Apollo Health and Lifestyle is looking at some restructuring that will bring it capital for growth…Apollo is always there to support them with capital for growth.”

With strong operational performance and strategic expansion plans across hospitals, pharmacies, and lifestyle businesses, Apollo Hospitals continues to reinforce its position as a leader in India’s healthcare sector.