SMC Global Securities Limited

3️⃣NBFCs earn from lending Revenue = Interest on loans Profitability = Spread (Interest earned – Interest paid) 📈Growth = Expanding loan book 📉Risk = Rising NPAs, interest rate hikes, defaults ⚠️They carry credit risk & rely heavily on borrowing

🔟 India’s financial future 🇮🇳 India is becoming wealthier + more financially aware • First-gen millionaires are rising • Financial literacy is spreading That makes Wealth Management a secular long-term theme But NBFCs will continue powering India’s credit needs

5️⃣NBFCs are cyclical beasts In boom cycles: credit demand = up, profits = up In downturns: defaults = up, profits = down ⚠️They are tightly linked to the credit cycle 👉Great during expansion 👉Painful during slowdowns

7️⃣ Risk-Reward Matrix NBFCs = High growth + High ROE, but volatile Wealth firms = Moderate ROE, but stable & scalable

A sticky wealth platform = High-quality compounding engine 9️⃣ So, which is the better bet? 🤔 Depends on your risk appetite ✅ Want leverage + aggressive growth? → NBFCs ✅ Prefer recurring income + scalable ops? → Wealth managers Diversification works. These sectors

6️⃣Wealth managers are market-linked 📈Bull markets = higher AUM, higher fees 📉Bear markets = withdrawals, lower income They don't lend or worry about NPAs But market volatility directly hits revenue Emotional clients = unpredictable cash flows

Examples: 🔹360 ONE 🔹HDFC Asset Management 👉 Revenue = % of Assets Under Management (AUM) 👉 Risk = Market crashes, client churn

In the next decade, millions will move from borrowers to investors. The firms that manage their money ethically and efficiently could be tomorrow’s multibaggers. Choose your side—or better, own a piece of both. — If you found this breakdown valuable, 🔁 Retweet to help others

8️⃣ Valuation Metrics Differ NBFCs: 🔹 Valued on Price-to-Book (P/B) 🔹 Just like banks Wealth Firms: 🔹 Valued on EV/AUM or Price-to-Earnings (P/E) 🔹 Just like FMCG or asset-light businesses