SMC Global Securities NCD Public Issue: Interest Rates, Returns, Risks and Taxation

The SMC Global Securities NCD Public Issue is a public issue of secured, rated, listed, redeemable and non-convertible debentures. According to the product note, the issue opens on 5 October 2026 and is scheduled to close on 16 October 2026, subject to the possibility of an earlier closure or extension under the terms of the issue.

The proposed NCDs have a face value and issue price of ₹1,000 per NCD, with a minimum application of ₹10,000, representing 10 NCDs, followed by investments in multiples of ₹1,000.

For investors considering fixed-income securities, the important questions are not simply “What is the interest rate?” Investors should also examine the maturity period, cash-flow structure, credit rating, security, taxation, liquidity and the issuer's ability to service its obligations.

Important: This article is an educational and unbiased analysis. It is not a recommendation to subscribe. Investors should read the complete prospectus and risk factors before making an investment decision.

Key Highlights of the NCD Issue

The issue has a base issue size of ₹75 crore, with an option to retain oversubscription of up to another ₹75 crore through the green-shoe option. Therefore, the aggregate issue size can reach ₹150 crore, representing up to 15 lakh NCDs.

The product note states that the NCDs have been assigned an ICRA A Stable rating for an amount of up to ₹512.79 crore. The rating description in the document indicates an adequate degree of safety regarding timely servicing of financial obligations and relatively low credit risk, but a credit rating should never be interpreted as a guarantee against default.

NCD Interest Rates and Available Series

There are six series across three maturity periods.

The prospectus summary specifies annual, cumulative and monthly payment structures depending on the selected series.

The cumulative options are particularly important because investors do not receive periodic interest. Instead, interest compounds into the redemption amount.

Real Calculation: How Much Can ₹10,000 Become?

Suppose an investor applies for the minimum ₹10,000, equivalent to 10 NCDs.

24-month annual-interest option

At a 9.50% coupon:

Annual interest = ₹10,000 × 9.50% = ₹950

Over two years, the simple total interest would be: ₹950 × 2 = ₹1,900

Therefore, before tax and assuming the investment remains outstanding for the complete period, total cash received through annual interest plus principal would be approximately: ₹10,000 + ₹1,900 = ₹11,900

The exact payment timing follows the issue's specified interest-payment terms.

24-month cumulative option

The stated maturity redemption amount is ₹1,199.03 per NCD.

For 10 NCDs:₹1,199.03 × 10 = ₹11,990.30

Thus:

Investment = ₹10,000
Maturity value = ₹11,990.30
Gross gain = ₹1,990.30

The product note specifies ₹1,199.03 as the redemption amount for Series II.

Investors comparing cumulative and annual options should therefore distinguish between the coupon rate and the effective annual yield. A cumulative instrument can generate compounded returns even though no periodic cash payment is received.

For a useful comparison, investors can use an NCD Return Calculator to compare maturity value, annual cash flow and effective yield across different investment amounts.

36-Month Cumulative Calculation

For the 36-month cumulative option, the stated redemption amount is ₹1,321.95 per NCD.

For 10 NCDs: ₹1,321.95 × 10 = ₹13,219.50

Therefore:

Initial investment = ₹10,000
Maturity amount = ₹13,219.50
Gross gain = ₹3,219.50

The stated effective yield is 9.75% per annum.

This illustrates why investors should not judge a cumulative NCD merely by multiplying the coupon rate by the number of years. Compounding affects the final maturity value.

60-Month Option: Monthly vs Annual Income

The five-year options provide two different cash-flow choices.

The monthly series carries a 9.57% coupon with a stated 10% effective yield, while the annual series carries a 10% coupon.

For a ₹10,000 investment in the monthly series, a simplified monthly-interest calculation is:

₹10,000 × 9.57% ÷ 12 = ₹79.75 per month

Over 60 months: ₹79.75 × 60 = ₹4,785

The ₹10,000 principal would then be redeemed according to the applicable terms.

For the annual 10% option:

Annual interest = ₹10,000 × 10% = ₹1,000

Over five years, the simple aggregate interest would be: ₹1,000 × 5 = ₹5,000

This comparison demonstrates an important investment principle: cash-flow frequency and headline yield are not the same thing. An investor requiring regular income may value monthly payments differently from an investor seeking a higher annual cash flow or a cumulative structure.

For a larger investment, simply scale the calculation. For example, a ₹1 lakh investment in the 10% annual series would produce approximately ₹10,000 gross interest per year, before tax.

Who Can Invest?

The issue divides investors into four broad categories.

Category I includes institutional investors such as eligible financial institutions, banks, mutual funds, insurance companies and other specified institutions.

Category II covers non-institutional investors, including eligible companies, statutory bodies, trusts, partnership firms, LLPs and other permitted entities.

Category III is for high-net-worth individual investors and HUFs applying for more than ₹10 lakh across the issue.

Category IV covers retail individual investors and HUFs applying up to and including ₹10 lakh, subject to the conditions specified in the prospectus.

The allocation ratio is:

• Institutional investors: 10%
• Non-institutional investors: 25%
• HNI investors: 25%
• Retail individual investors: 40%

The product note gives a total issue-size allocation of ₹15 crore, ₹37.50 crore, ₹37.50 crore and ₹60 crore respectively if the full ₹150 crore issue is retained.

Is the NCD Secured?

Yes. The instrument is described as secured, rated, listed, redeemable and non-convertible, and its seniority is stated as senior.

However, “secured” does not mean “risk-free.”

Investors should examine the precise security cover, charge, trustee arrangements, enforcement mechanism and ranking described in the full prospectus. In a default scenario, recovery depends on the underlying security, legal process, priority and realisable value of assets.

The product note itself warns investors about credit, market and default risks, including delay or default in payment.

What Will the Money Be Used For?

According to the issue document, the proceeds are intended primarily to meet the issuer's working-capital requirements and general corporate purposes.

This means investors are effectively lending money to the issuer for corporate funding purposes. The return offered to investors should therefore be evaluated against the creditworthiness and financial position of the issuer rather than compared only with bank-deposit rates.

Financial Performance: What Should Investors Examine?

The product note provides both standalone and consolidated financial information.

On a standalone basis, revenue from operations for FY 2025-26 was reported at approximately ₹968.12 crore, while profit after tax was approximately ₹81.32 crore and net worth approximately ₹1,018.17 crore.

For the quarter ended June 30, 2026, standalone revenue from operations was approximately ₹273.43 crore, with profit after tax of approximately ₹25.12 crore.

On a consolidated basis, FY 2025-26 revenue from operations was approximately ₹1,876.92 crore, profit after tax approximately ₹103.25 crore, and net worth approximately ₹1,303.98 crore.

These numbers provide useful context, but historical profitability does not guarantee future debt servicing.

Investors should additionally examine leverage, liquidity, asset quality, contingent liabilities, related-party transactions, cash flows and the detailed risk factors in the prospectus.

Taxation of NCD Interest

Interest from NCDs is generally taxable for an investor according to the applicable income-tax provisions. It should not be assumed that a 9.50% or 10% coupon represents the investor's post-tax return.

For example, assume an investor earns ₹10,000 of gross interest during a year.

At a hypothetical marginal tax rate of 30%, ignoring cess and other tax adjustments:

Gross interest = ₹10,000
Tax at 30% = ₹3,000
Approximate post-tax interest = ₹7,000

Therefore, the effective post-tax return would be approximately: ₹7,000 ÷ ₹1,00,000 = 7%

The actual tax impact depends on the investor's applicable tax regime, total income, surcharge, cess and other circumstances.

Does an NCD investment qualify for the ₹1.5 lakh 80C deduction?

Investors should not assume that subscribing to these NCDs qualifies for an 80C deduction.

The Income Tax Department states that the aggregate deduction limit for specified investments under the relevant 80C framework is ₹1.50 lakh, but the qualifying instruments are specifically prescribed. The current tax guidance does not make an ordinary corporate NCD investment generally eligible merely because it is a debt security.

Accordingly, an investor should not purchase these NCDs primarily for an 80C tax deduction.

TDS Consideration

The 2026 tax framework provides a TDS rate of 10% for interest payable on listed company debentures covered by the specified provisions.

TDS, where applicable, is only a mechanism for collecting tax in advance; it does not necessarily equal the investor's final tax liability. Investors should reconcile TDS with their annual tax return.

Regulatory Framework

Public issues of non-convertible securities are governed by the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, which remain the principal regulatory framework for such issues and were last amended by SEBI in January 2026.

The regulations cover matters including issuance and listing of non-convertible securities, disclosures, intermediaries and investor-protection requirements.

The issue document also refers to Regulation 31 concerning incentives. The accompanying brokerage document specifically states that no brokerage, commission or incentive—whether in cash, kind, services or otherwise—should be paid to a person making an application directly or indirectly.

This is important because distributor remuneration should not be confused with an investor's return.

Listing and Liquidity Risk

The NCDs are proposed to be listed on BSE, with the product note stating that listing is expected within three working days from issue closure, subject to the applicable process.

Listing provides a mechanism through which investors may potentially sell their NCDs before maturity.

However, listing does not guarantee liquidity.

The market price after listing can be above or below ₹1,000 depending on interest rates, credit perception, demand and supply, remaining maturity and broader market conditions.

Therefore, an investor who may need the money before maturity should not assume that the NCD can always be sold at its original issue price.

Key Risks Investors Should Consider

1. Credit risk

The issuer could experience financial stress and delay or default on interest or principal payments.

2. Interest-rate risk

If market interest rates rise after investment, an existing NCD with a fixed coupon can become less attractive, potentially reducing its secondary-market price.

3. Liquidity risk

An NCD may be listed but still have limited secondary-market trading.

4. Reinvestment risk

Investors receiving regular interest may have to reinvest those payments at lower rates if market yields decline.

5. Tax risk

The advertised coupon is a gross return. Tax can materially reduce the investor's actual return.

6. Concentration risk

Putting a large portion of a portfolio into one issuer can increase portfolio-specific credit risk.

7. Early exit risk

The absence of a put option means investors should not assume they can demand early repayment from the issuer. The product note shows the put and call options as not applicable.

NCD vs Bank Fixed Deposit: What Should Investors Compare?

An NCD offering a 10% yield should not automatically be considered superior to a bank deposit offering a lower rate.

Investors should compare:

• Pre-tax return
• Post-tax return
• Credit quality
• Deposit insurance, where applicable
• Liquidity
• Tenure
• Interest-payment frequency
• Reinvestment risk
• Security and ranking
• Secondary-market availability
• Portfolio concentration

A Fixed Income Comparison Tool can be useful for comparing the NCD's post-tax cash flows against bank deposits, bonds and other fixed-income products.

Should You Invest in This NCD?

There is no universal answer.

The issue may be relevant to investors who:

• understand corporate-credit risk;
• have a defined investment horizon of two to five years;
• are comfortable with a listed debt instrument;
• want predictable fixed-income cash flows;
• do not require guaranteed liquidity before maturity; and
• have diversified their overall debt portfolio.

It may be less suitable for investors who require immediate liquidity, cannot tolerate issuer-specific credit risk, or are looking for a government-backed or deposit-insured alternative.

The stated ICRA A Stable rating provides useful credit information, but investors should remember that ratings can change and do not eliminate default risk.

Final Takeaway

The 2026 NCD issue provides six series across 24, 36 and 60 months, with stated effective yields ranging from 9.50% to 10%, depending on the selected option. The investment minimum is ₹10,000, while the NCDs are proposed to be secured and listed on BSE.

The most important decision, however, is not simply choosing the highest advertised rate. Investors should match the series with their cash-flow requirements, calculate the post-tax return, evaluate credit and liquidity risks, and ensure that the investment does not create excessive concentration in corporate debt.

For example, a 10% gross return can translate into a substantially lower post-tax return for an investor in a higher tax bracket. Similarly, a five-year maturity may be inappropriate for someone who expects to need the invested capital within two or three years.

Therefore, the appropriate approach is to treat this issue as one component of a diversified fixed-income portfolio rather than as a substitute for emergency savings or highly liquid investments.

Always read the complete prospectus, risk factors and applicable terms before investing.