SMC Global Securities Limited (SMCGLOBAL.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the SMC Global Securities Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Kothari from X-B4 Advisory. Thank you and over to you sir.

Thank you. Good evening, everyone. Thank you for joining us on the Q4 FY '25 earnings conference call. Joining us today on the call are Mr. Subhash Chand Aggarwal, Chairman and Managing Director, SMC Group; Mr. Mahesh C. Gupta, Vice Chairman and Managing Director, SMC Group; Dr. D.K. Aggarwal, Chairman and Managing Director, SMC Capital Limited. Mr. Ajay Garg, Director and CEO, SMC Global Securities Limited; Mr. Anurag Bansal, Whole-Time Director, SMC Global Securities Limited; Mr. Himanshu Gupta, Director and CEO of Moneywise Financial Services Private Limited. Ms. Shruti Aggarwal, Whole-Time Director, SMC Global Securities Limited; and Mr. Vinod Kumar Jamar, President and Group CFO. Before we begin, please note that today's discussions 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 on the second last page of our earnings presentation, which is available on the stock exchanges and the company's website. With this, I now invite Mr. Subhash Aggarwal to share his opening remarks. Over to you, sir.

Good evening, everyone, and a warm welcome to all participants on this call. I trust you have had the opportunity to review our quarter 4 financial year '25 financial results and earnings presentation, which are available on both the stock exchanges and our website. Amid rising India, Pakistan tensions in recent days, we express our heartfelt prayers and gratitude for the well-being and safety of our armed forces, who tirelessly safeguard our nation day and night. Before discussing our final performance, allow me to provide some context on the border -- broader industry landscape and recent developments that have shaped the business environment. Industry outlook. The broking and financial services industry witnessed several significant developments in the last quarter, driven by regulatory changes and shifting market dynamics. One of the most notable industry-wide development has been the moderation in derivative trading volumes following the introduction of stricter norms in the F&O segment. This combined with rising geopolitical tensions has led to a visible slowdown in market participation and retail activity. Many intermediaries across the sector are navigating short-term revenue as such a result, India's capital markets are currently evolving through a pivotal transition shaped by regulatory shifts and global uncertainties. One of the most significant changes has been the enforcement of new F&O norms coupled with heightened geopolitical tensions. India is still on a strong path, but geopolitical risk remains a concern, which has led to a visible slowdown in market activity. These developments have tempered trading volumes, client engagement and overall exhibition in the short run. However, we see this as a strategic inflection point rather than a setback. Regulatory measures often trigger initial friction, but over time, they pave the way for a more disciplined, transparent and stable market environment. This transition offers long-term advantages, particularly for well-positioned intermediaries like us. Company highlights. Now let me talk -- walk -- let me walk you through some key performance highlights to -- for SMC Global Securities. Despite the regulatory headwinds, we reported revenue growth across all 3 of our core business segments broking, distribution and trading, financing and insurance broking. In quarter 4 financial '25, our consolidated revenue came in at INR 421.5 crores, EBITDA stood at INR 63 crores and PAT at INR 4.1 crores. For the full year, financial '25, revenue grew by 8.4% Y-o-Y to INR 1,775.7 crores with EBITDA at INR 419.4 crores and PAT at INR 146.8 crores. Our expansive network included 2,147 authorized persons across 425 -- 424 cites, underscoring our PAN-India reach. We now have 6,748 financial distributors, and our mutual fund AUM stands at INR 4,178 crores. In our NBFC opens, we are active through 41 branches covering 9 states, steadily expanding our leading footprint. Our insurance vertical continues to grow. Operating from 8 branches nationwide and supported by a strong base of 16,022 POS and 348 MISPs. While quarter 4 witnessing some revenue pressure due to external factors we remain confident of the revival across all verticals. Broking, financing and insurance as market conditions normalize and investor sentiment improved. Our diversified business model, expanding network and ongoing investments in technology leave us well equipped to pursue sustainable long-term growth. With that, I now hand over to Mr. Vinod Kumar Jamar, our President and Group CFO, for a detailed overview of our financial performance. Over to you, Vinod Ji.

Thank you, Subhash, sir, and good evening to everyone on the call. Let me now take you through financial performance for Q4 FY '25 and the full financial year on a consolidated basis. For Q4 FY '25, operating income stood at INR 421.5 crores. Operating EBITDA was approximately INR 63 crores, EBITDA margin came at 14.9%, PAT stood at INR 4.1 crores, with PAT margin of 1%. For full year FY '25, operating income reached INR 1,775.7 crores, marking an 8.4% Y-o-Y growth. Operating EBITDA stood at INR 409.4 (sic) [ INR 419.4 ] crores, showing a slight decline of 1.5% Y-o-Y. EBITDA margin was at 23.6%, PAT stood at INR 146.8 crores, with PAT margin of 8.3%. Segment-wise performance in the Broking Distribution and Trading segment, Q4 FY revenue was INR 240.5 crores. FY '25 revenue was INR 1,044.5 crores, up by 8.6% Y-o-Y. Branch network expanded to 208 from 188 in FY '24. In broking, DP AUA, asset under administration, we added INR 36,413 crores in our DP AUA during FY '25, marking a 46% growth, over 1 lakh new demat accounts were opened. Wealth advisory AUM reached INR 948 crores, a 4.4% increase Y-o-Y. Mutual fund AUM rose to INR 4,178 crores, up 9.9% Y-o-Y. We added 13,930 new SIPs in FY '25. Corporate FD procurement also showed marginal growth. In the financing segment Q4 revenue was INR 40.9 crores. FY '25 revenue stood at INR 220.6 crores (sic ) [ INR 222.6 crores ], reflecting an 8.2% Y-o-Y increase. NBFC AUM reached INR 1,291 crores, up by 4.2% Y-o-Y. GNPA and NNPA were 3.6% and 2.2%, respectively. In the insurance broking division, Q4 FY revenue stood at INR 160.3 crores, FY '20 (sic) [ FY '25 ] revenue was INR 570 crores, registering 7.9% Y-o-Y growth. Total insurance policies sold cross INR 10 lakh mark in FY '25. With this, we conclude our remarks and open the floor Q&A. Thank you.

[Operator Instructions] We have our first question from the line of Rahul, an individual investor.

Yes. I have a question regarding the NBFC segment. We understand that NBFC, the entire NBFC market is going through a bad phase and as far as our SMC is considered our GNPA is increasing, NNPA is increasing along the credit cost. The NBFC AUM has increased only by 4%, 5% mainly on the year-to-year basis. So have we seen a rock bottom? We can say by the end of this quarter, can we expect new beginning from this quarter itself?

Rahul, this is Himanshu Gupta. So as you rightly mentioned, this year was a bad phase for the industry as a whole, and we were very cautious regarding new lending. So we, in fact, had tightened our underwriting policies during the year. And as a result, we were able to grow just by about 4% to 5% of the AUM. And as you rightly also said the GNPA numbers for us also increased to 3.55% as compared to around 2.22% last year. So -- but if you compare it with the industry, our delinquencies and the credit quality is much better than many other players in the industries who are operating in the same segment. So we are in a much better position, first of all. And we are also very hopeful and confident about having this year FY '26 to be much better year for us in terms of the AUM growth as well as the quality of our portfolio. And also in addition to that, we expect our spreads or margins to be better because we are working on increasing our yields on our asset book as well as there are certain tailwinds in terms of the cost of finance, which is available for the NBFCs due to the reduction in interest rates and revision in RBI's stand on risk weight on bank loan to NBFCs. So as a whole, we expect this year to be much better as compared to FY '25.

So if you want to give the numbers on the guidance, which is for AUM growth in the other parameters, which normally industry look forward to?

So we expect this year, the AUM to grow by around 20%. But we would have better visibility as we go down the year quarter-on-quarter.

And what about GNPA and NNPA, credit cost about this first quarter? Like already 40 days to 45 days has been passed on what has been experiencing in terms of GNPA and all about the credit cost?

So -- no, there are certain large accounts which are included in the GNPA, and we are closely monitoring the recoveries in those accounts. So if -- as and when there is recovery in 1 or 2 accounts, we would see the numbers going down. So we are closely working on that. It is very difficult to comment whether it would happen in quarter 1 or other quarters, but we are expecting the recovery during the year.