Check Before You Invest : Smart Finsec Ltd

Q: Which industry/sub-sector does Smart Finsec Ltd belong to?

Smart Finsec Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q: Is Smart Finsec Ltd a good quality company?

Smart Finsec Ltd is a quality company, based on a multi-year financial track record. This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q: Is Smart Finsec Ltd undervalued or overvalued?

Smart Finsec Ltd appears Undervalued, as its key valuation ratios are lower than their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 27.01, Historic Median: 18.90. Price to Book, Current: 1.66, Historic Median: 2.23. Price to Sales, Current: 28.12, Historic Median: 58.50. EV to EBITDA, Current: 18.65, Historic Median: 13.17

Q: Is Smart Finsec Ltd a good buy now?

Smart Finsec Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Q: Total Income growth of Smart Finsec Ltd?

Smart Finsec Ltd Operating Income growth is -90.55% for FY-2025, which is below its 5-year CAGR of -24.47%, indicating slower growth.

Q: Return on Assets of Smart Finsec Ltd?

Smart Finsec Ltd Return on Asset is 7.8%, which is below its 5-year historical median of 10.5%, indicating deteriorated earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 49.58, Historic Median: 6.55. PPOP (%), Current: -50.16, Historic Median: -28.07. RoA (%), Current: 7.8, Historic Median: 10.5

Q: Return on Equity (ROE) of Smart Finsec Ltd?

Smart Finsec Ltd Return on Equity is 7.8% for FY-2025, which is below its 5-year historical median of 12.4%, indicating the business is making worse use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Smart Finsec Ltd?

Smart Finsec Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is -50.16% for FY-2025, which is below its 5-year median(-28.07%), indicating decreasing margins.

Q: Net Profit Margin of Smart Finsec Ltd?

Smart Finsec Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 49.58% for FY-2025, which is above its 5-year median( 6.55%), indicating increasing margins.

Q: Does its ROIC exceed its WACC?

Smart Finsec Ltd return on invested capital (ROIC) is 7.84% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

Snapshot

Q.1 Which industry/sub-sector does Smart Finsec Ltd belong to?

Smart Finsec Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Smart Finsec Ltd a good quality company?

Smart Finsec Ltd is a quality company, based on a multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is Smart Finsec Ltd undervalued or overvalued?

Smart Finsec Ltd appears Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	27.01	18.90
Price to Book	1.66	2.23
Price to Sales	28.12	58.50
EV to EBITDA	18.65	13.17

Q.4 Is Smart Finsec Ltd a good buy now?

Smart Finsec Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Total Income growth, NPM, PPOP, RoA and RoE compared to its last 5-year median.
How efficiently has it grown and managed operations?
By checking its Total Asset growth.
How strong is its Capital position and Asset Quality?
By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of Smart Finsec Ltd?

Smart Finsec Ltd Operating Income growth is -90.55% for FY-2025, which is below its 5-year CAGR of -24.47%, indicating slower growth.

Q.2 Return on Assets of Smart Finsec Ltd?

Smart Finsec Ltd Return on Asset is 7.8%, which is below its 5-year historical median of 10.5%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	49.58	6.55
PPOP (%)	-50.16	-28.07
RoA (%)	7.8	10.5

Q.3 Return on Equity (ROE) of Smart Finsec Ltd?

Smart Finsec Ltd Return on Equity is 7.8% for FY-2025, which is below its 5-year historical median of 12.4%, indicating the business is making worse use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Smart Finsec Ltd?

Smart Finsec Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is -50.16% for FY-2025, which is below its 5-year median(-28.07%), indicating decreasing margins.

Q.5 Net Profit Margin of Smart Finsec Ltd?

Smart Finsec Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 49.58% for FY-2025, which is above its 5-year median( 6.55%), indicating increasing margins.

Q.6 Does its ROIC exceed its WACC?

Smart Finsec Ltd return on invested capital (ROIC) is 7.84% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

B: Does the bank grow efficiently and manage its operating costs?

Q.7 Total Asset growth of Smart Finsec Ltd?

Smart Finsec Ltd Total Asset growth is 8.04% for FY-2025, which is above its 5-year CAGR of 5.72%, indicating faster growth.

Ownership & governance

D: Promoter shareholding and pledge status of Smart Finsec Ltd?

Q.1 Promoter shareholding and pledge status of Smart Finsec Ltd?

Promoters hold 74.99% of the Smart Finsec Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Smart Finsec Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Smart Finsec Ltd vs Industry Peers?

Smart Finsec Ltd AUM CAGR is 5.72%, compared to the 5-year industry median CAGR of 9.71%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Smart Finsec Ltd vs industry peers

Smart Finsec Ltd profit metrics are in line with the industry median level of 4.76%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM (%)	49.58	12.87
PPOP (%)	-50.16	-
RoA (%)	7.8	1.4

Q.3 Operating efficiency of Smart Finsec Ltd vs industry peers?

Smart Finsec Ltd ROCE (14.3) is above the industry median of (4.15); while the current ROE (12.4) are above than the 5-year average Industry ROE (2.3). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM (%)	49.58	12.87
PPOP (%)	-50.16	-
RoA (%)	7.8	1.4
ROCE (%)	10	4.15
ROE (%)	7.8	2.3

Valuation & price assessment

Q.1 Stock return of Smart Finsec Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 10.8% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	10.8%	12.5%	5.7%	-28.3%

Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	27.01	18.90	29.12
Price to Book	1.66	2.23	1.11
Price to Sales	28.12	58.50	9.10
EV to EBITDA	18.65	13.17	11.77

Q.3 Valuation ratios of Smart Finsec Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 1.66 is lower than its historical median of 2.23, indicating that the stock is trading below its historical average valuation.

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