If you saw "SMC Global Securities IPO" in your feed this week and assumed it was a share listing, stop there. SMC has opened a public issue of Non-Convertible Debentures, which means you are lending the company money at a fixed rate of interest, not buying a piece of it. Your return is capped at the coupon, you get your principal back at maturity if the company is solvent, and the only thing that can go wrong is the company failing to pay. That makes the questions different from an equity IPO. This note goes through what is on offer, what similar issues paid this quarter, whether the balance sheet can carry the debt, and where I land.
What is on offer
SMC is raising ₹150 Cr, a base of ₹75 Cr plus ₹75 Cr of oversubscription retention. The NCDs are secured, ₹1,000 face value, minimum ten units, so ₹10,000 gets you in. The issue opened on 5 October and closes on 16 October, allotment is first come first served, and listing is on BSE and NSE. It is a 100% fresh issue, there is no offer for sale, and the prospectus commits at least 75% of the money to working capital with the balance for general corporate purposes.
There are six series. For 24 months you get 9.50% a year, paid annually or cumulative. For 36 months, 9.75%. For 60 months, 10.00% paid annually, or 9.57% paid monthly which works out to the same 10.00% effective yield. ICRA rates the paper A with a stable outlook, which in rating language means adequate safety and low credit risk. One notch below A+, two below AA.
Allocation is 40% retail, 25% HNI, 25% non-institutional and 10% institutional. On the second day the issue was 1.44 times covered overall, with the non-institutional book at 1.99 times and institutions almost absent at 0.01 times.
What similar paper paid this quarter
The only way to know whether 10% is generous is to look at what other public NCD issues paid for the same tenors in the last two months. Muthoot Fincorp, rated AA by CRISIL, paid 8.90% for 24 months, 9.10% for 36 and 9.20% for 60 in September. Edelweiss Financial Services, rated A+, paid 8.65% for 24 months and 9.60% for 60. Paisalo Digital, rated AA by Brickwork and Infomerics, the smaller agencies, paid 9.53%, 9.92% and 10.46% in August, more than SMC at every tenor with a higher letter grade. Indel Money, rated A-, one notch below SMC, went as high as 12.25%.
So SMC sits where an A-rated issuer should sit: 60 to 80 bps above the AA names, 40 to 85 bps above Edelweiss, well below the A- paper. It is fairly priced for the rating, not generously. Two other anchors: the 10-year government bond yields about 7.2%, so you are being paid roughly 280 bps a year for taking SMC's credit risk instead of the government's, and bank fixed deposits sit around 7%.
One more comparison, with SMC's own history. This is the company's fourth public debt issue since July 2024, and the coupons are 25 bps lower across the board than the October 2025 issue. The company is borrowing more cheaply from the public even though, as the next section shows, its profit has fallen.
The business
SMC Global Securities has been around since 1994. It runs broking in equities, commodities and currencies, an NBFC lending book, insurance broking, wealth management, investment banking and depository services. That diversification is a strength compared with a pure broker, but every one of those lines earns more when markets are active and less when they are not, and the Nifty has just finished eight weeks of losses. The company is not spread across unrelated cycles; it is spread across one cycle.
The numbers a lender should look at
Consolidated revenue grew from ₹1,645 Cr in FY24 to ₹1,786 Cr in FY25 and ₹1,884 Cr in FY26, up 15% over two years. Profit after tax went the other way, from ₹188 Cr to ₹147 Cr to ₹103 Cr, down 45% in the same period. The first quarter of FY27 was better, with PAT of ₹37 Cr on revenue of ₹516 Cr, but one quarter does not reverse a two-year trend.
For a lender the profit line matters less than the debt line. Total debt was ₹1,012 Cr at the end of FY26 against net worth of about ₹1,304 Cr, a debt to equity ratio of 1.52 that rises to 1.68 once this issue is added. Interest costs run at about ₹57 Cr a quarter, close to ₹230 Cr a year, and consumed 64% of operating profit in the last quarter. Operating cash flow was negative in two of the last three years, which is common for a broker that funds client margins but is still the number that tells you the business consumes cash rather than generating it. Return on equity has slipped to about 8%.
None of this says SMC cannot pay a 10% coupon on ₹150 Cr. Interest on the full issue is ₹15 Cr a year against ₹103 Cr of profit, and the company has serviced three earlier public issues without incident. What it says is that each issue is being layered onto a balance sheet that is getting more leveraged while earnings fall, and that is the direction a lender should notice.
Flags from the prospectus
Three things worth reading before applying. The prospectus references a CBI chargesheet in the NSE co-location matter; it is disclosed, it is old, and it has not affected operations, but it is there. The security for these NCDs is a pari passu charge over trade receivables and the margin trading book, shared with existing lenders, with a 110% cover requirement, so in a bad outcome you stand in line with the banks rather than ahead of them. And institutional investors own only 2.4% of SMC's equity, with no mutual fund on the register, which means nobody with a large research team has chosen to own the company.
Where I land
The coupon is fair for an A-rated name and nothing more; the market has already offered higher yields at higher ratings this quarter. SMC has paid on time before and the arithmetic says it can pay again. But a lender's question is whether the borrower is getting safer or riskier with each tranche, and the answer here is riskier. If you want the yield, the 24-month series at 9.50% is the one, because it gets your money back before the next two years of broking cycles play out, and in a size that would not hurt if it went wrong. The 60-month paper at 10% asks you to trust a market-cycle business through a full cycle for 50 bps more, and I would not.
For educational purposes only, not investment advice. Do your own research.