The company's volatile quarterly performance reflects the inherent challenges facing this small-scale investment firm. Despite the sequential recovery in Q3 FY26, the broader narrative remains concerning, with net sales of ₹6.65 crores in the December quarter still trailing the ₹9.73 crores achieved in December 2024. The operating profit margin excluding other income improved to 31.13% from just 3.82% in the previous quarter, yet this metric stood at negative 5.76% in the year-ago period, highlighting the extreme fluctuations in operational efficiency.
Financial Performance: Erratic Revenue Trajectory
HB Portfolio's Q3 FY26 results reveal a company struggling with consistency across all key financial parameters. Net sales of ₹6.65 crores represented a robust 69.21% quarter-on-quarter increase from Q2 FY26's ₹3.93 crores, but this recovery merely brought revenues back to levels that remain 31.65% below the December 2024 quarter. The company's revenue generation has been characterised by wild swings, with sequential growth rates oscillating between negative 48.96% and positive 92.29% over the past year.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Cons. Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 6.65 | +69.21% | 1.45 | +1,712.50% | 16.84% |
| Sep'25 | 3.93 | -48.96% | 0.08 | -96.33% | 0.00% |
| Jun'25 | 7.70 | +79.07% | 2.18 | -171.24% | 27.66% |
| Mar'25 | 4.30 | -55.81% | -3.06 | +255.81% | -42.33% |
| Dec'24 | 9.73 | +92.29% | -0.86 | -315.00% | -10.59% |
| Sep'24 | 5.06 | -42.17% | 0.40 | -88.47% | -4.35% |
| Jun'24 | 8.75 | — | 3.47 | — | 37.37% |
The quality of earnings remains questionable. Operating profit before depreciation, interest, and tax (excluding other income) stood at ₹2.07 crores in Q3 FY26, yielding a margin of 31.13%. However, this metric has swung from a negative ₹1.86 crores in March 2025 to a positive ₹4.81 crores in June 2024, demonstrating the lack of operational stability. Employee costs have remained relatively stable at ₹2.55 crores in the December quarter, but this represents a significant fixed cost burden given the company's modest revenue base.
On a half-yearly basis (H1 FY26), the company reported consolidated net profit of ₹1.53 crores on revenues of ₹10.58 crores, representing a 28.47% decline in sales compared to the first half of FY25. The full-year FY25 results paint an even grimmer picture, with the company reporting zero profit after tax despite revenues of ₹27.00 crores, a 50.00% decline from FY24's ₹54.00 crores. The tax rate in FY25 stood at an unusual 100.00%, completely eroding the modest profit before tax of ₹1.00 crore.
Critical Concern: Revenue Volatility
HB Portfolio's quarterly revenue has fluctuated between ₹3.93 crores and ₹9.73 crores over the past five quarters, with no discernible pattern or trend. This extreme volatility raises serious questions about the sustainability and predictability of the business model, making it nearly impossible for investors to project future cash flows with any degree of confidence.
Operational Challenges: Weak Return Metrics
The company's return on equity (ROE) metrics reveal fundamental weaknesses in capital efficiency. The latest ROE stands at a deeply negative 0.59%, whilst the five-year average ROE of 2.02% ranks among the weakest in the NBFC sector. For context, peer companies such as SKP Securities deliver ROE of 17.20%, and Ceejay Finance achieves 9.30%, highlighting HB Portfolio's inability to generate adequate returns for shareholders. The return on capital employed (ROCE) of just 0.16% further underscores the poor utilisation of invested capital.
The balance sheet, whilst not heavily leveraged with zero long-term debt, shows concerning trends. Total shareholder funds declined to ₹276.52 crores in March 2025 from ₹285.87 crores in March 2024, driven by a reduction in reserves and surplus from ₹274.83 crores to ₹265.48 crores. Investments fell from ₹202.71 crores to ₹181.25 crores over the same period, suggesting potential asset liquidation or mark-to-market losses. Current assets plummeted from ₹214.54 crores to ₹86.74 crores, raising questions about liquidity management and asset quality.
Cash flow generation has been inconsistent, with operating cash flows of ₹8.00 crores in FY25 compared to ₹16.00 crores in FY24. The company deployed ₹6.00 crores in investing activities during FY25, primarily reflecting changes in its investment portfolio. With closing cash of just ₹5.00 crores, the company maintains minimal liquidity buffers, though its debt-free status provides some comfort. The debt-to-equity ratio of 0.00 is a positive, but it also suggests limited financial leverage to amplify returns during favourable market conditions.
Peer Comparison: Trailing on All Fronts
When benchmarked against comparable NBFCs, HB Portfolio's underperformance becomes starkly evident. The company's ROE of 2.02% lags significantly behind sector peers, with SKP Securities achieving 17.20%, Ceejay Finance at 9.30%, and even BAMPSL Securities managing 1.77%. The price-to-book value ratio of 0.23x suggests the market values the company's assets at a steep discount to book value, reflecting scepticism about future earnings potential and asset quality.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| HB Portfolio | NA (Loss Making) | 0.23 | 2.02 | 0.00 | 1.66 |
| SKP Securities | 6.88 | 1.20 | 17.20 | 0.35 | 2.06 |
| Ceejay Finance | 8.96 | 0.85 | 9.30 | 0.62 | 0.64 |
| BAMPSL Securities | 35.24 | 1.72 | 1.77 | 0.00 | — |
| Regis Industries | 31.96 | 2.42 | 1.16 | 0.00 | — |
| Apoorva Leasing | NA (Loss Making) | 0.47 | 0.00 | 0.00 | — |
The company's dividend yield of 1.66% provides some income support, with a recent dividend of ₹1.00 per share paid in November 2025. However, this payout appears unsustainable given the company's weak profitability and declining reserves. The institutional holding of merely 0.03% reflects the lack of conviction from sophisticated investors, with only eight mutual funds holding positions and zero foreign institutional investor interest.
Valuation Analysis: Discount Reflects Fundamental Weakness
HB Portfolio's valuation metrics paint a picture of a company trading at distressed levels. The price-to-book value of 0.23x implies the market values the entire business at less than one-quarter of its stated net worth. Whilst this might superficially appear attractive, the discount is justified by the company's inability to generate adequate returns on that book value. With an ROE of just 2.02%, the company destroys shareholder value rather than creating it, as this return falls well below the cost of equity capital.
The absence of a meaningful P/E ratio due to recent losses eliminates the most common valuation benchmark. The EV-to-EBITDA multiple of 45.25x appears elevated, but this metric loses relevance given the extreme volatility in EBITDA generation. The EV-to-sales ratio of 2.36x seems reasonable in isolation, but when combined with inconsistent profitability and declining revenues, it offers little comfort. The stock's 52-week range of ₹55.10 to ₹108.00 illustrates the market's uncertainty, with the current price of ₹60.20 hovering near the lower bound.
Valuation Grade: Very Expensive
Despite trading at a steep discount to book value, the company carries a "Very Expensive" valuation grade. This apparent contradiction reflects the fact that valuation must be assessed relative to earnings power and growth prospects, not just asset values. A company trading below book value but generating negative or minimal returns on equity can still be overvalued if there's no clear path to improved profitability.
Shareholding Pattern: Stable but Uninspiring
The shareholding structure has remained remarkably static over the past five quarters, with promoter holding steady at 61.45%. Lalit Bhasin holds the dominant promoter stake of 58.76%, with the remaining promoter shares distributed amongst family members and related entities. The absence of any sequential changes in promoter holding suggests neither increased confidence through accumulation nor distress through stake reduction.
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 61.45% | 61.45% | 61.45% | 61.45% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.01% | 0.01% | 0.01% | 0.01% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.01% | 0.01% | 0.01% | 0.01% | 0.00% |
| Non-Institutional | 38.53% | 38.53% | 38.53% | 38.53% | 0.00% |
The institutional presence remains negligible, with mutual funds holding just 0.01% and other domestic institutional investors at 0.01%. This minimal institutional participation reflects the stock's lack of appeal to professional fund managers who typically demand consistent earnings, transparent governance, and clear growth visibility. The 38.53% non-institutional holding comprises largely retail investors who may lack the resources to conduct thorough due diligence. Importantly, there is no promoter pledging, eliminating one potential risk factor.
Stock Performance: Severe Underperformance
The stock's price performance has been dismal across virtually all timeframes. Over the past year, HB Portfolio has declined 40.50% whilst the Sensex gained 8.52%, resulting in a negative alpha of 49.02 percentage points. The underperformance versus the NBFC sector is even more pronounced, with the sector advancing 24.01% whilst HB Portfolio plummeted, creating a performance gap of 64.51 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +4.37% | -1.14% | +5.51% |
| 1 Month | -1.10% | -1.20% | +0.10% |
| 3 Months | -19.72% | -2.19% | -17.53% |
| 6 Months | -23.80% | +2.59% | -26.39% |
| YTD | -3.76% | -3.04% | -0.72% |
| 1 Year | -40.50% | +8.52% | -49.02% |
| 2 Years | -21.68% | +15.47% | -37.15% |
| 3 Years | +45.24% | +36.73% | +8.51% |
The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying both gains and losses. With a volatility of 48.10% over the past year compared to the Sensex's 11.53%, HB Portfolio exposes investors to substantial risk without commensurate returns. The risk-adjusted return of negative 0.84 reflects poor compensation for the elevated volatility, firmly placing it in the "high risk, low return" category.
Technical indicators uniformly signal bearish trends. The stock trades below all key moving averages, including the 5-day (₹59.57), 20-day (₹58.76), 50-day (₹61.73), 100-day (₹68.31), and 200-day (₹78.41) averages. The MACD shows bearish signals on both weekly and monthly timeframes, whilst the RSI indicates bullish momentum on a weekly basis but no clear signal monthly. The overall technical trend classification of "Bearish" since November 24, 2025, reflects sustained selling pressure with no signs of reversal.
Investment Thesis: Multiple Red Flags
The investment case for HB Portfolio is severely compromised by multiple structural weaknesses. The company's quality grade of "Below Average" reflects its inconsistent financial performance and weak return metrics. The five-year sales growth of 18.48% might appear respectable in isolation, but it's undermined by extreme quarterly volatility and the sharp 50.00% revenue decline in FY25. The five-year EBIT growth of 16.22% similarly loses credibility when examined against the backdrop of recent operating losses and negative margins.
The financial trend classification of "Flat" for the December 2025 quarter represents a marginal improvement from previous "Negative" and "Very Negative" ratings, but fails to inspire confidence. The company's Mojo Score of just 16 out of 100 places it firmly in "Strong Sell" territory, with the rating unchanged since February 2025. The score breakdown reveals weaknesses across all four key parameters: bearish technicals, flat financial performance, below-average quality, and very expensive valuation despite the low absolute price.
KEY STRENGTHS
- Zero debt provides financial flexibility and eliminates bankruptcy risk
- Stable promoter holding at 61.45% with no pledging demonstrates commitment
- Sequential profit recovery in Q3 FY26 shows potential for turnaround
- Book value per share of ₹204.89 provides asset backing
- Dividend payment of ₹1.00 per share maintains income component
- Long-term price performance shows 217.68% return over five years
KEY CONCERNS
- Extreme revenue volatility with no predictable pattern across quarters
- ROE of 2.02% far below cost of equity, destroying shareholder value
- 40.50% stock price decline over past year with continued weakness
- Negligible institutional holding (0.03%) signals lack of professional confidence
- Shareholder funds declining from ₹285.87 crores to ₹276.52 crores
- Current assets plummeting from ₹214.54 crores to ₹86.74 crores
- Operating margins swinging from -43.26% to +54.97% across quarters
- FY25 tax rate of 100% completely eroding modest profitability
Outlook: What to Watch
For HB Portfolio to improve its investment profile, several critical developments would need to materialise. On the positive side, sustained revenue stability over multiple quarters would demonstrate improved business predictability. A return to consistent profitability with ROE exceeding 10% would signal genuine operational improvement. Increased institutional participation would validate improved fundamentals, whilst transparent disclosure of investment strategy and portfolio composition would enhance confidence. Meaningful reduction in quarterly earnings volatility and improved cash generation would address core concerns.
POSITIVE CATALYSTS
- → Three consecutive quarters of revenue above ₹8 crores
- → ROE sustainably above 10% for two quarters
- → Institutional holding increasing to above 5%
- → Clear articulation of investment strategy and portfolio holdings
- → Operating cash flow consistently above ₹10 crores quarterly
RED FLAGS
- → Quarterly revenue falling below ₹4 crores
- → Return to negative operating margins
- → Further decline in shareholder funds below ₹270 crores
- → Institutional holding declining further from current 0.03%
- → Stock breaking below ₹55 (52-week low)
However, the risk factors loom larger. A return to quarterly losses would confirm the Q3 recovery as temporary rather than sustainable. Further erosion of shareholder funds would raise capital adequacy concerns. Continued institutional disinterest would signal persistent fundamental weakness, whilst lack of transparency regarding investment activities would maintain valuation uncertainty. Any breach of the ₹55.10 support level would likely trigger further technical selling pressure.
The Verdict: Avoid This Value Trap
Score: 16/100
For Fresh Investors: Avoid initiating positions. The combination of erratic earnings, weak return metrics, bearish technicals, and minimal institutional interest creates an unattractive risk-reward profile. The low absolute price and discount to book value do not compensate for fundamental weaknesses and lack of earnings visibility.
For Existing Holders: Consider exiting on any technical bounce towards ₹65-70 levels. The 40.50% decline over the past year reflects deteriorating fundamentals rather than temporary market weakness. With the stock in a confirmed bearish trend and trading below all moving averages, further downside remains likely.
Fair Value Estimate: ₹45-50 (25% downside risk from current levels), based on book value adjusted for poor ROE and elevated business risk.
HB Portfolio's Q3 FY26 results, whilst showing sequential improvement, fail to address the fundamental concerns plaguing this micro-cap NBFC. The extreme revenue volatility, anaemic return on equity of 2.02%, and complete absence of institutional confidence suggest a company struggling to define a sustainable business model. The "Very Expensive" valuation grade, despite trading at 0.23x book value, correctly identifies that low prices reflect poor fundamentals rather than opportunity. Until the company demonstrates consistent profitability, improved capital efficiency, and transparent communication, investors would be prudent to seek opportunities elsewhere in the NBFC sector.
Note: ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. Investments in securities are subject to market risks, and there is no guarantee of returns.
