Why fund managers rerated Smartgroup after Federal Budget clarity on EVs

Years of regulatory uncertainty around electric vehicle novated leases lifted for Smartgroup after the Federal Budget, driving a sharp re-rating in the stock.

30 Jun 2026 · 5 min read

Salary packaging and novated leasing provider Smartgroup Corporation rose 26% in May 2026 after the Federal Budget confirmed ongoing support for the tax-advantaged treatment of electric vehicles under novated leases, according to Seneca Financial Solutions' May 2026 Monthly Report, removing a multi-year regulatory overhang that had weighed on the stock.

A regulatory risk resolved in the company's favour

1851 Capital's May 2026 Article detailed the significance of that clarity: Smartgroup had been under pressure for two to three years from regulatory risk around novated leases for electric vehicles, and getting certainty on the regulatory settings for the next five or so years worked out considerably better than many had anticipated, leaving the company trading on a price-to-earnings ratio of around 15 times against low-double-digit growth. BKI Investment Company's March 2026 Quarterly Report tied the improving demand backdrop to a broader fuel supply shock, noting corporates and households were increasingly exploring battery electric vehicles to reduce exposure to volatile fuel prices, with Smartgroup reporting strong growth in BEV orders at its February full-year result.

We think that people are underestimating the growth in novated lease space over the next two to three years, with the take-up of electric cars. It's an absolute no-brainer to use a novated lease from an after-tax perspective for anyone out there who fits the criteria.

— 1851 Capital, Article, May 2026

Lennox Capital Partners' May 2026 Monthly Report added a further tailwind: the Federal Budget left novated leasing as one of the few avenues of tax-effective benefit untouched at a time when other concessions were wound back, reinforcing the attractiveness of salary packaging for households facing higher interest rates and bracket creep. Investors Mutual Limited's June 2026 Quarterly Report confirmed the operational momentum behind the re-rating, with average monthly novated leasing volumes growing 22% at the company's May AGM trading update, contributing to the stock rising 55.8% over the quarter.

What managers are watching next

Not every manager held the position through the full re-rating. Investors Mutual Limited's June 2026 report noted the fund trimmed its position to take advantage of the share price strength following the quarter's sharp rally, while Ellerston Capital had taken profits progressively through late 2025 as the stock recovered from its earlier languishing levels. With Oracle Advisory Group's September 2025 Quarterly Report having flagged a target of mid-40s percent EBITDA margins as achievable through further customer penetration and technology use, the key remaining question for holders is how much of the electric vehicle-driven volume growth is now already reflected in the post-Budget share price.