Understanding the Current Rating
The Strong Sell rating assigned to Humming Bird Education Ltd indicates a cautious stance for investors, suggesting that the stock is expected to underperform relative to the broader market and its peers. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal.
Quality Assessment
As of 26 December 2025, Humming Bird Education Ltd’s quality grade is classified as below average. The company has demonstrated weak long-term fundamental strength, with a compound annual growth rate (CAGR) of operating profits at -0.61% over the past five years. This negative growth trend highlights challenges in sustaining profitability and operational efficiency. Additionally, the company’s ability to service its debt remains poor, evidenced by an average EBIT to interest ratio of -0.25, signalling financial stress and limited capacity to meet interest obligations comfortably.
Return on Equity (ROE), a key indicator of profitability relative to shareholders’ funds, stands at an average of 5.27%. This modest figure suggests that the company is generating relatively low returns for its investors, which is a concern for those seeking robust earnings growth and capital appreciation.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Valuation Perspective
Currently, Humming Bird Education Ltd is considered expensive relative to its fundamentals. The stock trades at a price-to-book (P/B) value of 5.5, which is high for a company with below-average quality metrics. Despite this, the company’s ROE has improved to 13.4%, indicating some profitability gains. However, the valuation premium is not fully justified given the company’s flat financial trend and weak operational performance.
The price-earnings-to-growth (PEG) ratio stands at a low 0.1, reflecting a disconnect between the stock price and earnings growth expectations. While profits have risen by 50% over the past year, the stock price has declined sharply, delivering a negative return of -74.74% over the same period. This divergence suggests that the market remains sceptical about the sustainability of profit growth or the company’s ability to convert earnings into shareholder value.
Financial Trend Analysis
The financial grade for Humming Bird Education Ltd is flat, indicating stagnation in key financial metrics. The company reported flat results in the September 2021 quarter, with no significant negative triggers identified since then. However, the overall trend remains unimpressive, with operating profits showing negligible growth and limited improvement in debt servicing capacity.
Investors should note that the company’s long-term performance has been below par, with returns underperforming the BSE500 index over the last three years, one year, and three months. This persistent underperformance highlights structural challenges that have yet to be addressed effectively.
Technical Outlook
From a technical standpoint, the stock is mildly bearish. Recent price movements reflect a downward trajectory, with the stock declining by 5.00% in a single day and 9.52% over the past month. The six-month and year-to-date returns are deeply negative at -76.10% and -75.87%, respectively, underscoring significant selling pressure and weak investor sentiment.
Such technical signals reinforce the cautionary stance of the Strong Sell rating, suggesting that the stock may continue to face headwinds in the near term unless there is a meaningful turnaround in fundamentals or market perception.
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What This Means for Investors
The Strong Sell rating on Humming Bird Education Ltd serves as a clear signal for investors to exercise caution. The combination of weak quality metrics, expensive valuation, flat financial trends, and bearish technical indicators suggests that the stock is currently not an attractive investment opportunity. Investors should be wary of the risks associated with holding this stock, particularly given its significant negative returns over the past year and ongoing operational challenges.
For those considering exposure to this company, it is essential to monitor any developments that could improve its fundamentals or market sentiment. Until such improvements materialise, the Strong Sell rating reflects a prudent approach to risk management and capital preservation.
Summary of Key Metrics as of 26 December 2025
- Mojo Score: 23.0 (Strong Sell)
- Market Capitalisation: Microcap
- Operating Profit CAGR (5 years): -0.61%
- Average EBIT to Interest Ratio: -0.25
- Average Return on Equity: 5.27%
- Price to Book Value: 5.5
- Return on Equity (latest): 13.4%
- PEG Ratio: 0.1
- Stock Returns: 1D -5.00%, 1M -9.52%, 6M -76.10%, 1Y -74.74%
Investors should weigh these factors carefully when considering their portfolio allocations and remain vigilant for any changes in the company’s operational or financial outlook.
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