INSIGHT--> LARGE CAP VS MIDCAP VS SMALLCAP, THE WINNER IS..?
Small Caps Beat Large Caps by a Mile… But There’s a Catch!
Everyone talks about how Mid & Small Caps have outperformed Large Caps.
But the latest earnings analysis reveals a much more interesting story.
The headline numbers look spectacular:
Since FY17:
• Large Cap PAT CAGR: 14.0%
• Mid Cap PAT CAGR: 21.2%
• Small Cap PAT CAGR: 36.8%
At first glance, it looks like Small Caps are the clear winner.
But then comes the Outlier Effect.
##Remove the Best & Worst 2% — The Story Changes
After removing the extreme profit performers from each category:
• Large Cap PAT CAGR falls from 14.0% → 13.5%
• Mid Cap falls from 21.2% → 17.1%
• Small Cap falls sharply from 36.8% → 24.8%
That's a BIG difference.
So what's really driving Small Cap earnings?
A meaningful part of their long-term outperformance comes from a relatively small number of extreme winners and losers.
------>he Bigger Surprise: Margins
The earnings growth story isn't entirely about companies growing faster.
A major reason is margin recovery.
Since FY17:
Mid Cap PAT Margin:
6.0% → 12.8%
Small Cap PAT Margin:
1.3% → 8.4%
Large Cap PAT Margin:
11.9% → 12.4%
In simple words:
Mid & Small Caps started from a much weaker profitability base.
##Large Caps Have One Major Advantage
Large caps have delivered their earnings growth with far less volatility.
TTM June 2026 PAT:
Large Caps: ₹14.7 lakh crore
Mid Caps: ₹3.8 lakh crore
Small Caps: ₹1.6 lakh crore
------>Bottom Line
Small Caps delivered spectacular long-term earnings growth — but the numbers become less spectacular when you remove the outliers.
SOME EXAMPLES::
LARGECAP-