Operator: Ladies and gentlemen, good day and welcome to Q2 and H1 FY27 Earnings Conference Call of SMC Global Securities Limited, hosted by X-B4 Advisory. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Sipani from X-B4 Advisory. Thank you, and over to you, Gautam.
Gautam Sipani: Thank you. Good evening, everyone, and thank you for joining us on the Q2 and H1 FY27 earnings conference call of SMC Global Securities Limited. Joining us today are Mr. Subhash Chand Aggarwal, who is the Chairman and Managing Director of SMC Group; Mr. Mahesh C. Gupta, Vice Chairman and Managing Director of SMC Group; Dr. D.K. Aggarwal, who is the Managing Director and the Chairman of the SMC Capitals Limited; Mr. Ajay Garg, who is the Director and CEO of SMC Global Securities Limited; Mr. Anurag Bansal, Whole Time Director of the SMC Global Securities Limited; Mr. Himanshu Gupta, Director and the CEO of Moneywise Financial Services Private Limited; Ms. Shruti Aggarwal, Whole Time Director of SMC Global Securities Limited; Mr. Pranay Aggarwal, Director and CEO of StoxKart; and Mr. Rohit Nayyar, Group CFO.
Gautam Sipani: Before we begin, please note that today's discussion may include forward-looking statements which reflect the company's current views and expectations. These statements are subject to risks and uncertainties, and actual results may differ materially. A detailed safe harbor statement is provided in our earnings presentation, available on the stock exchanges and the company's website. With that, I now invite Mr. Subhash Chand Aggarwal to share his opening remarks. Over to you, sir.
Subhash Chand Aggarwal: Thank you, Gautam. Good evening, everyone, and a warm welcome to all participants. We hope you had the opportunity to review our Q2 and H1 FY27 financial results and the earnings presentation, both of which are available on the stock exchanges and on our website. Before I discuss our performance during the quarter, I would like to share an important funding update. On 28 September 2026, we filed our prospectus for public issue of secured, rated, listed, redeemable, non-convertible debentures of INR 1,000 face value each, with a base size of INR 75 crore and a green shoe option of up to another INR 75 crore, for a total of INR 150 crore.
Subhash Chand Aggarwal: The issue opened on 5 October and drew an excellent response with subscriptions of INR 166.49 crore and oversubscription over the total issue size. We pre-closed the issue on 9 October and retained the full INR 150 crore.
Subhash Chand Aggarwal: The NCDs were allotted on 13 October and listed on BSE on 14 October. This response reflects investor trust in our company, and it strengthens our liquidity and diversifies our borrowing mix. I thank all our investors and stakeholders for their continuous support. Now I take you through each business segment. Let me set out the environment we operated in during the quarter. The July-September quarter tested investor sentiment. The Nifty 50 ended the quarter about 5% lower, and September was a difficult month, with foreign investors turning net seller after two months of buying. Yet the underlying engine of Indian market, the domestic investor, held firm. Three numbers capture this. Close to 90 lakh demat accounts were opened during the quarter, the strongest quarterly addition since late 2024, taking the country's investor base past 24 crore accounts. Sixty-nine IPOs raised INR
Subhash Chand Aggarwal: 90,462 crore, the largest quarter ever for primary markets, and monthly SIP contributions raised an all-time high of INR 32,490 crore in September, even as markets corrected. Indian households are investing through the cycle, not around it, and that is the structural opportunity our business is built on. The quarter also brought one of the most significant changes to market structure and incentives. From 3 August, the exchange introduced a Closing Auction Session for F&O stocks, followed by a realigned pre-open session from 7 September. These changes improve price discovery and market integrity. They also required every broker to re-engineer trading systems at short notice. I am pleased to say SMC and StoxKart were fully live for all the clients from day one. On funding, the RBI revised its framework for bank lending to capital market.
Subhash Chand Aggarwal: Intermediary came into effect from 1 July, requiring full collateralization of bank facilities to brokers. This raises the bar on capital and compliance across the country. We believe it favors well-capitalized, diversified intermediaries, and SMC entered this framework from a position of strength. The insurance industry continued to grow at a healthy pace, led by health. Non-life premiums grew 9.6% in the April-August period, with health insurance now accounting for 44% of non-life premiums. On the regulatory side, IRDAI moved insurance intermediary to continuous registration from 30 July, and in September, released a consultation paper on the economics of insurance distribution. We are engaging with the consultation and see the direction towards transparency and policyholder outcomes as positive for established compliant intermediaries. For the NBFC sector, the quarter was constructive. Credit growth was sustained, asset quality trends were healthy, and lenders continued to prefer secured granular lending.
Subhash Chand Aggarwal: The RBI kept the repo rate unchanged at 5.25% in August, which supported a moderation in funding costs during the quarter. Subsequent to quarter end, on 7 October, the RBI raised the repo rate by 25 basis points to 5.5%. Speaking about business, our diversified model spanning broking, distribution, insurance, and lending delivered consolidated revenue growth of 21% in the H1, with PAT 28%. Talking about our three main segments, our broking franchises run on two engines, SMC, our full-service platform serving investors through advice and relationships, and StoxKart, our digital-first platform for self-directed traders. This quarter, both engines widened what we offer our clients and how we earn from them. Our broking client base, including StoxKart, grew to 14.2 lakh as of September 2026, and broking DP AUA rose to INR 166,737 crore, up about 17% from March 2026.
Subhash Chand Aggarwal: Online penetration of our client base increased further to 75% from 72% at the end of FY26. Mutual Fund Distribution AUM stood at INR 4,711 crore with 91,145 running SIPs, and our wealth AUA grew about 25% in the H1 to INR 1,464 crore. StoxKart continued to build a subscription-led model that is distinctive in the industry. To sum up, SMC is broadening its product shelf, StoxKart is building a recurring revenue base, and both are less dependent on derivative volumes than a year ago. Over the last two years, we have told you that we were deliberately reshaping our economic lending book, moving away from large ticket LAPs and tightening unsecured business loans, and building a granular secured granular lending book in Micro LAPs, gold loans, and asset finance.
Subhash Chand Aggarwal: This quarter, the result of that strategy are clearly visible in four metrics, in asset quality, portfolio mix, and cost of funds. Our AUM stood at INR 103.1 crore as of September 2026, with disbursements of INR 323 crore in the H1 through 41 branches across seven states. Within this, our focus products are growing. Micro-LAP AUM has risen to INR 172 crore from INR 121 crore in March 2026, and gold loans to INR 74 crore from INR 66 crore. NIM improved to 7.8% in H1 FY27 from 7.3% in FY26. The NBFC earned a PAT of INR 23.3 crore in the H1, close to INR 24.6 crore it earned in the whole year of FY26. Our capital adequacy ratio strengthened further to 46.1%, giving us ample headroom to grow.
Subhash Chand Aggarwal: Looking ahead, we are mindful that the RBI's 25 basis points repo rate hike in October may put some upward pressure on our borrowing costs depending on the pace of transmission and later repricing. Our diversified borrowing mix and strong capital base give us flexibility to manage this. With the run-off effect of our older products largely behind us, we expect growth from our focus products to show more clearly in the coming quarters. In our insurance broking business and the investment we are making in technology across the group, our insurance broking delivered revenue growth of 19.3% YOY in Q2 FY27 and about 30% for the H1. Gross premium for H1 FY27 stood at INR 1,598 crore with 5.78 lakh policies issued through a network of 16,916 POSP agents and 387 motor insurance service providers. Going forward, our focus remains on three areas.
Subhash Chand Aggarwal: Growing our health portfolio, expanding our corporate portfolio, and scaling reinsurance. Each of these depends our relationship with clients and broadens our revenue base beyond motor. With that, I hand over to our Group CFO, Mr. Rohit Nayyar, to take you through the financial performance.
Rohit Nayyar: Thank you, Subhashji, and good evening, everyone. Thanks for joining the call. I will now take you through our consolidated performance for the quarter and the half year, 30 September 2026. For the quarter ended September 2026, consolidated operational income stood at INR 532.5 crore, a growth of 20.9% YOY and 3.4% quarter on quarter. EBITDA was INR 101.6 crore, up 20.4% YOY, with an EBITDA margin of 19.1%, broadly stable as compared with 19.2% in Q2 FY26. Profit after tax grew 34.4% to INR 28.2 crore, compared with INR 21 crore in Q2 FY26, and the PAT margin improved by 50 basis points to 5.3%.
Rohit Nayyar: For the first half, consolidated operational income stood at INR 1,047.5 crore, up 21.1% YOY. EBITDA was INR 208.4 crore, up 13%, with a margin of 19.9%, and profit after tax was INR 65 crore, up 27.6% YOY. The PAT margin improved by 30 basis points to 6.2%.
Rohit Nayyar: On a standalone basis, Q2 FY27 operational income stood at INR 256.7 crore, up by 18.6% YOY, with EBITDA of INR 59.6 crore, up 25.5% YOY at a margin of 23.2%. The standalone PAT was INR 9.5 crore, up 50.9% YOY. For the H1 FY27 standalone, operational income grew 14.6% to INR 530.1 crore, with EBITDA of INR 131.2 crore, which grew 19.6% year on year, with a margin of 24.8% and PAT of INR 34.6 crore, which grew 19% year on year. Now coming to our segment performance. The broking distribution and trading segment reported revenue of INR 288.3 crore, registering a YOY growth of 19.7%, while segment EBIT increased 15% to INR 56.1 crore. The insurance broking segment delivered revenue of INR 193.8 crore, up 19.3% YOY, with segment EBIT growing by 7.1% to INR 4.5 crore.
Rohit Nayyar: The EBIT performance continues to reflect our investments in manpower, technology, and the reinsurance business.
Rohit Nayyar: The financing or NBFC segment recorded strong growth, with revenue increasing by 33.6% YOY to INR 62 crore and segment EBIT rising by 43% to INR 37.6 crore, supported by higher portfolio yields and a lower cost of funds. For the first half, broking revenue grew 17.2% to INR 604.6 crore. Insurance broking revenue grew 29.8% to INR 361.1 crore, and the NBFC revenue grew 11.5% to INR 108.5 crore. Our balance sheet remains strong. The consolidated net worth stood at INR 1,358 crore as of September 2026, with a debt equity ratio of 1.63. At the NBFC level, our capital adequacy ratio was 46.1%. Our ratings stand at ICRA A1+ for short-term borrowings and ICRA A and CRISIL A with a stable outlook for long-term borrowings.
Rohit Nayyar: In summary, the first half of FY27 reflects healthy growth in our fee-based businesses, an NBFC book that is now higher yielding and of better quality, and a balance sheet positioned to fund the next phase of growth. We remain focused on financial discipline, operating leverage, and building sustainable returns for our shareholders. With this, we conclude our opening remarks and open the floor for questions. Thank you.
Operator: Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Debal Shaw, an individual investor. Please go ahead.
Debal Shaw: Hello. Hi, sir. Am I audible?
Operator: Yes, you are.
Debal Shaw: Yeah. So firstly, I wanted to ask, how are we reducing our dependence on broking and trading revenue?
Ajay Garg: Yeah. This is Ajay Garg, Director and CEO of SMC Global. I believe 60% to 70% of the revenue comes from broking, distribution, and trading.
Debal Shaw: Right. How are we trying to reduce the dependence on this broking and trading revenue since it is also a volatile component?
Ajay Garg: SMC is a well-diversified group, so the major segments are broking, NBFC financing, distribution, and insurance broking. We are working 360 degree and want to expand 360 degree.
Debal Shaw: Okay, so broking trading will share around 60% of the revenue. Roughly around that, got it. Okay.
Ajay Garg: All the segments, and it is a well-diversified group.
Debal Shaw: Got it. And on to Mutual Fund AUM as well. In Q1, our Mutual Fund AUM was around INR 4,700 roughly crores. Q2, it's around INR 4,711 crores. Since market has also corrected, just wanted some clarity on what are the trends that we are seeing on that front.
Anurag Bansal: Hi, I am Raghav. Hi, I am Raghav Ansul here. Our Mutual Fund Distribution business operates through two business verticals, distribution division and wealth division. During Q2, our Mutual Fund AUM, as you said rightly, has moderated marginally by approximately 2% from INR 4,787 crores to INR 4,711 crores. But I believe this is a relatively resilient performance considering that the broader equity market indices have declined by over more than 5% during this quarter. I hope I answered the question.
Debal Shaw: Got it. Also onto StoxKart. We have added around 26,000 subscriptions in Q1, and revenue had also grown like 4 times in Q1. When do we expect it to break even? What do we expect over that?
Pranay Aggarwal: Yes. Hi, this is Pranay Agrawal. We have taken a strategy where we continue to invest in the growth of StoxKart. We want to have a higher base before aiming for a profit or break even. Currently, we have a quarterly revenue of north of INR 20 crores. We want to take this to at least, what budgets we have given, we at least aim for more than INR 100 crore revenue this year and good increase next year also. To fund this high growth, we need to keep investing in the technology and marketing. Hence, I don't see break even coming this year, but we will maintain the same level of bottom line. We don't want to increase the loss, burn rate, which we are currently going through.
Pranay Aggarwal: Next year, we will have a higher base and probably we can achieve good numbers in terms of bottom line.
Debal Shaw: Okay. How much investment are we expecting on a yearly basis in StoxKart?
Pranay Aggarwal: We expect to invest INR 50 crores more in StoxKart, which will primarily be used for our increase in MTF business. We want to increase our book size in MTF.
Debal Shaw: Okay. Got it. Thank you. That was from my side. I will get in touch.
Pranay Aggarwal: Right. Thank you.
Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, you may press star and one on your touchtone telephone. Our next question comes from the line of Meghan Shaw with Value Bros. Please go ahead.
[Analyst 1]: Yeah. Hi. So sir, our NBFC AUM was INR 1,000 crores approximate at June, which was I think down from INR 1,100 crores at March. So I wanted to ask against your FY27 target of INR 1,300 crores. So what was the AUM at September?
Himanshu Gupta: Yeah. Hi, this is Himanshu Gupta. So basically, during the half year, the AUM has reduced from INR 1,119, as you rightly said, at the end of March, to INR 1,031 crore at the end of September quarter. So, if you will recollect, we have been consciously shifting the, changing the portfolio mix. So we have focused on the lower ticket size secured product, which are Micro-LAP, gold loan and other product. While we have discontinued large ticket size LAP and tightened the unsecured loan. So what is happening as a result is, during the half year, there was a rundown of around INR 253 crores from these two discontinued and tightened loan products, which were large ticket LAP and unsecured loans, while there was a growth in other products by INR 208 crores. So as you know, we are in a transition phase in terms of product mix.
Himanshu Gupta: Currently there is a run-off effect, which is happening on the total loan book. Once we are done with this transition, then you will see the growth in the AUM. However, the yields have been increasing as a result, like during this half year, like for the September quarter, versus what it was around six months back. So there has been an increase in blended yield by 25 basis points. And also fresh slippages have gone down due to this tightening. So the quality of portfolio has been increasing. But as you rightly said, the portfolio is not increasing, which will reflect in the coming year. We are very confident about that. However, with the target that we had initially taken of about INR 1,300 crores for this year-end, we will not be reaching that level because the rundown in the discontinued product is happening at a faster pace.
Himanshu Gupta: Actually, in fact, that is good for us in a way, because portfolio mix is actually shifting fast, faster than we had actually initially planned.
[Analyst 1]: What is the expectation for this year, sir, for the NBFC year?
Himanshu Gupta: AUM, by the end of the year, we expect to be around INR 1,125 to INR 1,150 crores. But the run-off for the discontinued product, you need to understand that could have been higher in the next year, which has been shifted to this year.
[Analyst 1]: Oh, okay. As you said, the RBI raised the repo rate by 25 basis points to 5.5%. How do you expect borrowing cost and NIM to trend? What share of our borrowings is floating? How much can be passed on to the customers?
Himanshu Gupta: Well, the repo rate has increased by only 5 basis points. Usually we have seen the transition to be around 75% to 80% of what RBI increases or decreases the repo rate. That is an RBI study. We expect 20 basis point increase in our cost gradually as and when the reset gets due. More than 90% of the borrowing is at floating rate, so definitely the borrowing cost will go up by around 20 basis points. However, as I said earlier, there has been increasing yield on our loan book as we are shifting the portfolio to more retail granular book. As we have seen in last six months also, our yields have gone up by around 45 basis points. With the further change in mix, we expect no further increase in our yield.
Himanshu Gupta: So, at the recent RBI rate increase, we expect there would be almost negligible impact on our net interest margin.
[Analyst 1]: Okay, got it. And sir, on the NBFC side, one last question was that our secured lending is stated at 82.4% around of the book. While SME WCTL described as unsecured loan book says 22.3% of AUM. Could you clarify how secured share is defined and what is the long-term intent of unsecured book?
Himanshu Gupta: We plan to reduce the unsecured loan book further from current level. We expect it to be below 15% in about a year or so. And we want to maintain it at 10% to 15% level.
[Analyst 1]: Okay, got it. And sir, one question on insurance side that our IRDAI consultation paper which came recently. It is recalibrating our economics of insurance distribution. It proposes commission caps across products and channels and tighter expense of management limits. Which of your products and channels are exposed to this and is there any impact on the revenue for this insurance segment to you?
[Company Representative] (SMC Insurance): Hi, Megan, this is Sakshi from SMC Insurance. As far as the consultation paper is concerned, it is a draft consultation paper which has been open to the public and the stakeholders for their comments. Since it is only a draft consultation paper at this point of time, we shall not be able to comment on the impact of revenue and the product till the final proposal is out. However, we are hopeful that the regulator will consider the comments from the different stakeholders before the final guidelines are released.
[Analyst 1]: Okay. Any targets for our insurance segment, how it will be growing in the coming quarter or so?
[Company Representative] (SMC Insurance): We are hopeful if nothing changes or if some impacts are done, we shall be able to achieve our budgeted numbers.
[Analyst 1]: Okay. Thank you so much.
[Company Representative] (SMC Insurance): Thank you.
Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Reminder to all the participants that you may press star and one on your touchtone phone in order to ask a question. Thank you. Ladies and gentlemen, if you would like to ask a question, you may press star and one on your touchtone telephone. Our next question comes from the line of Sumit Shah with SN Investments. Please go ahead. Sumit, you may please proceed with the question. Hi, Mr. Sumit Shah. Yes, you are.
[Analyst 2]: Yeah. My question was that in Q1, management said that Q2 might be much better. Consolidated revenue rose around 21% YOY in Q2, but PAT fell 23% from Q1 to around INR 28.2 crores. And standalone profit also fell around 62% to INR 9.5 crores. So what drove the sequential decline?
Subhash Chand Aggarwal: Mr. Sumit Shah, in Q1, management said Q2 should be better, and we were expecting it should be better. But since some changes in regulatory changes by SEBI, CAS, Closing Auction Session, that has been introduced on 3 August, and this was a bigger change for auctions and F&O closing, and investors had suffered losses. And by the time this could not be understood, and there were so many anomalies that people can manipulate the closing price. So people suffered the losses and in due course, people started doing lesser transactions. So turnover has been reduced, and by that time, now SEBI has modified and reviewed it, and they are going to modified version on 26 December. So we were expecting that Q2 should do much better.
Subhash Chand Aggarwal: Our brokerage reduced a little bit, and our treasury operations also not profitable because it was the deficiency of arbitrage strategies. The lack of arbitrage strategies and lower brokerage side on this account, we have reduced our revenue as well as our net profit. Because of that, our profit has been reduced, and that is why our Q2 is lesser than Q1.
[Analyst 2]: Okay. Understood. What I also wanted to ask is, what is strategic priority for the rest of FY27, and which verticals will be the primary growth drivers, including investment banking and GIFT City, given the strong IPO market this year?
Subhash Chand Aggarwal: Mr. Sumit, you see, every vertical we are doing our good. Our investment banking has done much better than the previous period. Which other vertical you ask us? Investment banking beside GIFT City. Yeah, GIFT City, there are three exchanges. One is promoted by BSE, one is promoted by NSE, and third is International Gold Exchange. International Gold Exchange, there were challenges earlier. Now it has been restarted. Some quota system has been introduced, and people have raised to the court. For certain period, stock exchange could not function because people had got the stay. While other exchanges, they are doing reasonably good, but still it has yet to pick up. But we are having very strength in GIFT City. We are having very good position. You can say our market share more than 25% in GIFT City. So we are doing much better.
[Analyst 2]: Okay. Understood, sir. Another question that the group runs 11 business lines across nine subsidiaries. How do you allocate your capital and management bandwidth across them? Are there any of those businesses under review for a scale-up or partnership or exit?
Subhash Chand Aggarwal: Mr. Sumit, no such plan is there as of now. We can always welcome for some equity strategical investors, if that is suitable to us and that increase our credibility and capital and which suit to us. Otherwise, we are fine. We are doing well in all our vertical. We have sufficiently capitalized, so we do not find any urgency for doing that.
[Analyst 2]: Okay. Understood. Thank you, sir.
Subhash Chand Aggarwal: Thank you.
Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question, press star and one. As there are no further questions from the participant, I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team. As there are no further questions from the participant, I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
Ajay Garg: Hello? Hello?
Operator: Yes, sir.
Ajay Garg: Thank you everyone for joining us today and for your questions. This quarter, our fee-based businesses continue to grow and our financing book became stronger and better quality. Despite a volatile market, we remain confident in the long-term opportunity ahead and committed to transparent communication with all our stakeholders. For any follow-up, please reach out to our investors relationship partnership at X-B4 Advisory. We look forward to speaking with you again next quarter. Thank you and good evening to all. Thank you.
Operator: Thank you so much, sir. Ladies and gentlemen, on behalf of SMC Global Securities Limited, that concludes today's call. Thank you for joining us and you may now disconnect your lines.
