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    SMC Global Securities Limited

    SMCGLOBAL
    Financial Services·31 Oct 2025
    Management Summary

    SMC Global Securities reported a mixed Q2 FY26, with consolidated revenue growing 3.6% QoQ to Rs. 440.3 crores, primarily driven by strong performance in its insurance broking segment which grew 21% YoY. However, profitability was significantly impacted by softer trading volumes, higher funding costs, and regulatory changes, leading to a 54% YoY decline in PAT to Rs. 21.0 crores and EBITDA margin compression to 19.2%. The NBFC segment also saw a revenue decline and a slight increase in NPAs, though management remains optimistic about recovery in H2 FY26.

    Highlights

    5

    • Consolidated revenue from operations grew 3.6% QoQ to Rs. 440.3 crores, supported by steady performance in the insurance business.

    • Insurance broking revenue grew 21% YoY to Rs. 162.5 crores, driven by robust growth in both life and general insurance.

    • Mutual fund AUM rose to Rs. 4,459 crores, reflecting continued investor trust and steady SIP inflows.

    • NBFC collection efficiency maintained at a healthy 98.47%, with secured AUM over 65%.

    • Client base and distribution network continued to expand, with 2,152 authorized persons and 6,573 financial distributors pan-India.

    Concerns

    5

    • EBITDA for Q2 FY26 was Rs. 84.4 crores, and PAT stood at Rs. 21.0 crores, impacted by softer trading volumes and higher funding costs.

    • EBITDA margins dropped from 26.4% YoY to 19.2% in Q2 FY26.

    • PAT fell 54% YoY in Q2, primarily due to reduced exchange commission income and lower fair value gains on investments.

    • Broking, trading, and distribution segments witnessed temporary moderation due to market-wide adjustments and regulatory changes, leading to a 12.78% YoY revenue decline.

    • NBFC revenue declined 7.93% YoY to Rs. 46.4 crores in Q2 FY26, and GNPA rose to 3.6% with NNPA at 2.5%.

    What Changed1

    vs Q3 FY26

    Guidance items6 → 3 (-3)
    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • Consolidated Revenue
      ₹440.3 Cr
      QoQ+3.6%
    • Consolidated EBITDA
      ₹84.4 Cr
    • Consolidated EBITDA Margin
      19.2%
      YoY-27.3%
    • Consolidated PAT
      ₹21 Cr
      YoY-54%
    • Consolidated PAT Margin
      4.8%

    H1 FY26

    1
    • Consolidated PAT
      ₹51 Cr

    Segment breakdown

    • Broking, Distribution & Trading Segment₹240.9 Cr53.6%
    • Financing NBFC Segment₹46.4 Cr10.3%
    • Insurance Broking Division₹162.5 Cr36.1%
    Donut· Share of Revenue

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Debt

    Gross ₹1,700 crores

    Guidance & targets

    3
    CategoryTargetPriority
    Profitability
    H2 PAT
    Rs. 90 to 100 crores
    		Medium
    NBFC Portfolio
    Unsecured Loan Exposure
    below 25%
    		High
    Overall Profitability
    FY26 Profit
    recover to the extent we have profits in last year
    		Medium

    Broking Segment Revenue Recovery

    Next quarter (Q3 FY26)
    CurrentRs. 240.9 crores (Q2 FY26), -12.78% YoY
    TargetImprovement over Q2 FY26

    Why it matters

    Recovery in the core broking segment is essential for overall revenue and profitability growth, especially given management's optimistic H2 outlook.

    No, we expect the situation to improve because if you remember, last year in October, SEBI brought in certain changes in derivative segments, and all those activities hampered the business across the industry. So, for the first two quarters, the base was higher, and now we will be growing, and market conditions will improve. So, we expect the next two quarters to be better.

    How to verify

    key_financials.segment_breakdown[name='Broking, Distribution & Trading Segment'].metrics[label='Revenue']

    Risks & concerns

    4
    RiskSeverity

    Regulatory Changes and Market Volatility in Broking

    Tighter F&O margin norms, revised expiry cycles, and heightened global uncertainty have impacted trading sentiment and led to moderation in broking volumes and earnings. — Management acknowledged

    high

    NBFC Sector Headwinds and Asset Quality

    Moderation in credit growth due to calibrated approach towards MSME and unsecured retail lending, tighter RBI oversight, and uneven funding conditions. GNPA rose to 3.6% and NNPA to 2.5%. — Management acknowledged

    medium

    Margin Compression due to External Factors

    Slower growth and margin compression, particularly in broking and NBFC, influenced by regulatory changes, challenging market conditions, reduced exchange commission income (Rs. 35 crores), and lower fair value gains on investments (Rs. 18 crores reduction). — Management acknowledged

    high

    Impact of GST on Insurance Commissions

    Reduction of GST on certain insurance products led to commission slabs including GST, slightly impacting top line and commission rates. — Management acknowledged

    low

    Q&A highlights

    7

    “Actually, EBITDA margins dropped because of two main reasons. I am talking about six-monthly numbers. So, one is that our exchange commission income reduced by Rs. 35 crores, which is in line with the exchange turnover also. And another contributing factor is our fair value gains on investments, which were around Rs. 25 crores in the last half year, whereas this year it is around Rs. 7 crores.”

    Analyst questioned the significant drop in EBITDA margins, and management provided specific financial reasons for the decline.

    asked by Dhruv Parav

    3 min read6 chapters

    Detailed Narrative

    01

    Overall Financial Performance and Profitability Challenges

    SMC Global Securities reported consolidated revenue from operations of Rs. 440.3 crores in Q2 FY26, marking a 3.6% quarter-on-quarter growth. However, profitability was significantly impacted, with EBITDA at Rs. 84.4 crores and PAT at Rs. 21.0 crores, leading to an EBITDA margin of 19.2% and a PAT margin of 4.8%. The EBITDA margin saw a substantial decline from 26.4% in the previous year, and PAT fell 54% YoY, primarily due to a Rs. 35 crore reduction in exchange commission income and a Rs. 18 crore reduction in fair value gains on investments compared to the last half year.

    02

    Broking and Capital Market Segment Performance

    The broking, distribution, and trading segment's revenue for Q2 FY26 was Rs. 240.9 crores, a decline from Rs. 276.2 crores in Q2 FY25, reflecting a 12.78% YoY decrease. This moderation was attributed to softer trading volumes and regulatory changes in the derivatives market. Despite these headwinds, the company continued to expand its client base and distribution network, reaching 2,152 authorized persons and 6,573 financial distributors. Mutual fund AUM grew to Rs. 4,459 crores, and online trading contributed 67% of the overall turnover, highlighting the success of digital initiatives.

    03

    NBFC Segment Performance and Strategic Shifts

    The financing NBFC segment reported revenue of Rs. 46.4 crores in Q2 FY26, down from Rs. 50.4 crores in Q2 FY25, a 7.93% YoY decline. AUM stood at Rs. 1,088 crores, with a healthy collection efficiency of 98.47% and over 65% secured AUM. However, GNPA increased to 3.6% and NNPA to 2.5%. Management explained the AUM dip was due to discontinuing the low-spread prime LAP product and shifting to Micro LAP, alongside tightened underwriting policies for unsecured products. The company is actively rebalancing its portfolio, aiming to reduce unsecured business loan exposure from 35% to below 25% over the next year.

    04

    Insurance Broking Division's Strong Growth

    The insurance broking business continued its strong growth momentum, with revenue increasing 21% YoY to Rs. 162.5 crores in Q2 FY26. For H1 FY26, the division generated a total gross premium of Rs. 1,364 crores and sold 4.93 lakh policies. The PAT for H1 FY26 was Rs. 5.57 crores, slightly higher than Rs. 5.42 crores in H1 FY25. Management noted that while revenue is consistently increasing, it remains a low-margin business due to motor insurance premiums and payouts, with GST inclusion in commission slabs also slightly impacting the top line.

    05

    Industry Landscape and Regulatory Impact

    The broking and capital market industry experienced consolidation in Q2 FY26, driven by tighter F&O margin norms, revised expiry cycles, and global uncertainty🌐. The non-banking financial services sector also faced moderation in credit growth due to RBI's tighter oversight on MSME and unsecured retail lending. These regulatory shifts, while leading to temporary moderation in trading volumes and earnings, are seen by management as fostering a more stable and transparent capital market, positioning diversified players like SMC Global for long-term strength.

    06

    Outlook and H2 Expectations

    Despite the challenging Q2, management expressed optimism for the second half of FY26, expecting market conditions to improve and anticipating better performance in Q3 and Q4. They aim to recover to last year's profit levels for the full year, with a specific H2 PAT target of Rs. 90-100 crores. The company believes its diversified business model, strong digital ecosystem, and nationwide reach will enable it to capitalize on opportunities as market activity normalizes and investor participation strengthens.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.