Smartgroup Shares Slide 8% With Oil Plunge and RBA Rate Hike in Focus for EV-Fueled Novated Leasing Business

SYDNEY — Shares of Smartgroup Corp. fell nearly 8% on Tuesday, giving back recent gains as investors weighed a sharp drop in oil prices and an interest rate increase from Australia's central bank.

Smartgroup stock fell 96 cents, or 7.97%, to close at A$11.08, after trading between A$10.83 and A$12.15. About 1.07 million shares changed hands, above the stock's recent average volume. The company's market value fell to about A$1.5 billion.

It was not immediately clear what drove the decline. Smartgroup did not release any market-sensitive news on Tuesday.

Oil and rates in focus

The drop came on a day of two significant developments for Smartgroup's business.

Global oil prices fell about 7% to 8% overnight on hopes for U.S.-Iran talks. Market watchers have noted that higher fuel costs have strengthened the appeal of electric vehicles, which dominate Smartgroup's novated lease orders.

Also on Tuesday, the Reserve Bank of Australia raised its cash rate to 4.85%, its highest level since 2008. Novated leases are a form of finance, so higher interest rates can increase the repayments built into each lease, though the tax savings from salary packaging can become more valuable.

What Smartgroup does

Smartgroup provides salary packaging, novated leasing and fleet management services to Australian employers and employees, particularly in the health, charity and government sectors.

Novated leasing allows employees to lease a vehicle through their employer and pay for it and its running costs from pre-tax salary.

Electric vehicle boom

The company has benefited from strong demand for electric vehicles, supported by the federal government's Electric Car Discount, which exempts eligible electric cars from fringe benefits tax.

In the first half of 2026, battery electric vehicles made up 68% of new novated lease orders, and new battery electric vehicle orders surged 162%. Overall new lease vehicle orders rose 34%, and settlements increased 17% to a record.

Smartgroup had 91,600 novated leases under management, up 15%.

Strong results

For the six months ended June 30, Smartgroup's revenue rose 13% to A$179.5 million, EBITDA increased 16% to A$73.8 million, and net profit after tax and amortization rose 11% to A$42.4 million.

The company declared a fully franked interim dividend of 21.5 cents per share, up 10%.

Chief Executive Scott Wharton said demand for novated leasing remained robust, while noting management was mindful of broader economic conditions and consumer sentiment.

Volatile trading

Smartgroup shares have been volatile in recent days. Last Thursday, the stock was among the best performers on the benchmark index, jumping sharply.

The shares have traded between A$7.22 and A$13.65 over the past 52 weeks. Despite Tuesday's fall, the stock remains up about 34% over the past year.

Analysts cautious

Some analysts have turned more cautious after the stock's strong run. Macquarie downgraded Smartgroup to neutral from outperform in August, with a price target of A$11.31.

What's next

Investors will watch oil prices, interest rates and government policy on electric vehicles, all of which could affect demand for novated leases.

Any changes to the Electric Car Discount, which has been a key driver of demand, would be closely watched by the market.