SMC GLOBAL SECURITIES....213/283 ??

ABOUT THE COMPANY

SMC Global Securities Ltd (SMC) is a well-diversified financial service company in India & Abroad, offering one-stop investment solutions in trading & investments, since 1990. It offers advanced broking services across equity, derivative, currency and commodity asset classes, financial analytics, mortgage advisory, investment banking and executions in cash & future equities.

Business Segments

1) Broking, Distribution & Trading (60% in H1 FY25 vs 67% in FY22):

a) Broking: The company is a full-service broker for investments in Stocks, Mutual Funds, Corporate FDs, ETFs, US Stocks, Commodities, Futures & Options, Bonds, etc. Its WOS Moneywise Finvest Ltd operates a discount broking platform under the brand name STOXKART.

b) Distribution: The company distributes IPOs, Mutual Funds, NCDs, Corporate Fixed Deposits, PMS, Capital gain bonds, and Floating rate bonds through its network of 198 branches, 2,297 authorized persons, spanning 434 cities, and 6,990 financial distributors across India. It is ranked amongst the top 20 syndicators in most of the Debt & Equity Issuances in the retail segment.

c) Trading: The company specializes in High-Frequency Trading (HFT), Arbitrage, and Algorithmic Trading, and provides clearing and settlement services for trading members across equity markets, equity derivatives, currency derivatives, etc. It has established partnerships with 7 PSU and private banks, including PNB, IOB, UBI, and Ujjivan Bank, offering online trading services to their customers through 3-in-1 tie-ups. Additionally, the company provides wealth management and investment banking services.

Operational Metrics:

Broking DP AUA (Rs. Cr): 1,09,923 in H1 FY25 vs 49,564 in FY22

Broking Clients (‘000): 1,117 in H1 FY25 vs 779 in FY22

Mutual Funds AUM (Rs. Cr): 4,618 in H1 FY25 vs 3,080 in FY22

Corporate FD Procurement (Rs. Cr): 2,864 in H1 FY25 vs 5,596 in FY22

Bonds Procurement (Rs. Cr): 1,150 in H1 FY25 vs 3,847 in FY22

2) Insurance Broking (28% in H1 FY25 vs 24% in FY22): 

SMC Insurance Brokers Pvt. Ltd., a subsidiary registered with IRDAI, offers comprehensive services in both Life Insurance and General Insurance categories. It operates through 7 branches across India, supported by a network of 15,858 Point of Sales and 328 Motor Insurance Service Providers.

Operational Metrics:

Insurance Gross Premium (Rs. Cr): 1,315 in H1 FY25 vs 2,084 in FY22

No. of Policies (‘000): 471 in H1 FY25 vs 802 in FY22

Revenue Mix H1 FY25:

General Insurance: 91%

Life Insurance: 9% 

3) Financing (12% in H1 FY25 vs 9% in FY22)::

Moneywise Financial Services Pvt. Ltd., a WOS, is a middle-layer NBFC providing a range of financial services, including SME Loans Against Property (LAP), SME onward lending to NBFCs/MFIs, SME equipment financing for medical and industrial equipment, gold loans, loans against securities, etc. In H1 FY25, it introduced a new product, Micro-LAP. The company operates 31 branches across 8 states and 23 major cities in India.

Operational Metrics:

AUM (Rs. Cr): 1,278 Cr in H1 FY25 vs 658 in FY22

Disbursements (Rs. Cr): 417 in H1 FY25 vs 515 in FY22

GNPA: 2.16% in H1 FY25 vs 2.83% in FY22

NNPA: 1% in H1 FY25 vs 1.99% in FY22

CRAR: 37% in H1 FY25 vs 51% in FY22

NIM: 7% in H1 FY25 vs 10% in FY22 

Digital Initiatives

The company has revamped its websites with advanced technology, enhanced user interfaces, and new features. It now offers trading tools like SMC ACE, SMC Easy Invest, SMC Algotrader, Autotrender NXT, HFT Trading, and Zendesk. Its mobile app serves as a unified platform for trading and investments across equities, mutual funds, IPOs, insurance, fixed deposits, and research. In H1 FY25, the website attracted 2.79 million visitors, and the mobile app saw 11.6 lakh installations.

Debt

The total debt has increased from Rs. 497 Cr in FY22 to Rs. 1,564 Cr as of Q2 FY25.

Focus

The company aims to expand its customer base, prioritize digital marketing, venture into unexplored markets, and consistently innovate its product offerings.1) Broking, Distribution & Trading (60% in H1 FY25 vs 67% in FY22):

FUNDAMENTALS

1. Sales and Profitability:

• Sales Growth: There has been consistent growth in sales from ₹293 Cr in FY14 to ₹1,642 Cr in FY24. This shows a positive growth trajectory, despite dips in some years, such as in FY20 and FY21, likely due to the COVID-19 pandemic.

• Operating Profit Margin (OPM): The OPM fluctuates, peaking at 27% in FY23 and reaching 24% in FY25. This reflects healthy profitability management and an efficient operating structure, with a dip in FY20 and FY21 indicating potential operational struggles during the pandemic.

• Net Profit: Net profit showed a steady increase from ₹23 Cr in FY14 to ₹188 Cr in FY24, though FY20 recorded a significant drop. The sharp rebound in FY21 and FY22 indicates recovery from the economic downturn caused by the pandemic.

• EPS: The earnings per share (EPS) have grown from ₹1.99 in FY14 to ₹13.91 in FY25, indicating strong growth in shareholder value.

2. Borrowings and Liabilities:

• Borrowings: Borrowings have increased significantly over the years, from ₹38 Cr in FY14 to ₹1,695 Cr in FY25. This is indicative of increased leverage to finance the company’s expansion, which should be monitored closely for financial stability. The company primarily uses short-term borrowings, which has implications for liquidity management.

• Liabilities: The total liabilities have grown from ₹902 Cr in FY14 to ₹4,921 Cr in FY25. The largest portion of this is trade payables and advances from customers, both of which show growing commitments. The ratio of liabilities to assets should be reviewed for risk.

3. Cash Flow Analysis:

• Cash Flow from Operating Activities: The company has seen fluctuating cash flow from operations, with negative cash flow in FY14, FY15, FY16, and FY17, likely due to the company’s initial investments in growth. Positive operating cash flow in FY20–FY25 reflects better operational efficiency and profitability.

• Investing and Financing Activities: Cash flow from investing activities shows variability, with outflows in several years due to investments in assets, but the financing activities show a steady inflow from borrowings in some periods, such as FY16 and FY17. The cash flow dynamics reflect the company’s growth phase and its reliance on external funding sources.

• Net Cash Flow: The net cash flow has been negative for several years, particularly in FY14 to FY16. However, the company has shown a positive net cash flow in FY17, FY19, FY20, and FY22. A positive trend in the last few years (especially in FY24) suggests a recovering financial position.

4. Ratios:

• Debtor Days: Debtor days have been high, with fluctuations from 295 days in FY14 to 137 days in FY25. This reduction in debtor days shows that the company has improved its collection period, helping with liquidity.

• Cash Conversion Cycle: Similar to debtor days, the cash conversion cycle has decreased from 295 days in FY14 to 137 days in FY25. This suggests improved efficiency in turning sales into cash.

• ROCE: The return on capital employed (ROCE) improved from 8% in FY14 to 17.89% in FY24, indicating better capital utilization and a strong return on invested capital.

5. Shareholding:

• Promoter Holding: The promoter holding has remained stable around 67%, indicating strong management control over the company. The consistent promoter holding can be seen as a positive sign of commitment and alignment with shareholder interests.

• Public Holding: Public shareholding has fluctuated between 31–37%, reflecting some investor interest, though it remains significantly lower than promoter holdings.

Conclusion and Recommendations:

• Growth Potential: The company shows a solid track record of sales growth and profitability. The increasing sales and stable profit margins indicate a well-positioned business for the future. However, a large increase in borrowings and liabilities requires careful monitoring.

• Debt Management: Given the rise in borrowings, the company should focus on reducing its debt to ensure financial stability. The high levels of short-term borrowings could put pressure on liquidity.

• Cash Flow Stability: The improvement in cash flow from operations is a positive indicator of business health. However, the company must focus on reducing its reliance on external financing to avoid risks in the future.

• Valuation: The company appears undervalued with a relatively low P/E ratio of 8.47 compared to the industry average of 15.6, making it an attractive option for value investors. However, further analysis is required to confirm its long-term sustainability and growth trajectory.

TECHNICALS

Chart Overview (SMC Global Securities Ltd.):

• Price Action: The stock's price has shown significant volatility from 2022 to 2025, with a noticeable uptrend starting around mid-2024. There’s a low price point marked near ₹99, followed by a rebound, currently at ₹118.

• Key Levels:

  • Support Level: ₹99 (the price reached this low and began to recover).

  • Resistance Levels:

    • ₹177.5: Immediate resistance (shown on the chart).

    • ₹183: Another resistance zone identified for potential breakout.

    • ₹212: Target price for further growth.

• Price Target: The chart marks a potential upside target of ₹212, reflecting a 93.97% potential gain from the current price of ₹118.

• Trend Lines: A bullish trend is shown, with price targets moving upwards, indicating a forecast for future growth after the consolidation phase around ₹117.

• Time Frame: The chart covers data from 2022 to mid-2025, with predictions extending into 2026.

• Volume: Volume is shown in bars at the bottom of the chart, indicating trading activity, and aligns with price movement.

Bollinger Bands suggests us that the volatility is decreasing, and a breakout is further expected.

Volume Analysis is showing us that when the prices were increasing, volume was increasing, when the price were prices were decreasing, volume was decreasing and now again we can see the price & volume is increasing

Volume Analysis shows us that maximum positions were created by big investors at and around 108 which makes the support very strong for future.