HB Stockholdings Limited, a non-banking financial company, engages in the investment and finance activities in India. It is involved in the investment, purchase, and sale of securities. The company was formerly known as HB Portfolio Leasing Limited and changed its name to HB Stockholdings Limited in February 1997. HB Stockholdings Limited was incorporated in 1985 and is based in Gurugram, India.

India

HB Stockholdings Limited

Financial Services

The company pays dividends from time to time. It has paid dividends in less than half the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has been moderate and on par with its peers. On average, the company pays dividends annually. 

HBSL.NS reported revenue of INR 0mn in the last 12 months, down 100% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock's performance has been mixed in the past six months, with growth following a decline. The stock has lagged its global peers from the same sector and industry (as shown above), underperforming then by 17ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

Historically, HBSL.NS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -48160.7%, down from 178.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -10.9%, below the peers. 

HB Stockholdings Limited reported a return on equity (RoE) of -11.2% in the last 12 months, down from 30.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -10.6% in the last 12 months, a decrease from 29.5% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

HBSL.NS has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and is unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, excessive margin volatility, and poor cash flow generation.

In highly turbulent market conditions, HBSL.NS is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, HBSL.NS is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to notable. We would also like to highlight the notable intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is overpriced compared to similar stocks. In particular, the stock is of fair value on EV/EBITDA, overvalued on P/FC. 

HB Stockholdings Limited

₹ 82

2

HB Stockholdings Limited

₹ 82

2

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Risk / Profitability

Risk factor

Profitability factor

₹ 82

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