Choice International Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

Choice International delivered a strong start to FY26 with significant margin expansion and robust growth across its diversified business model. The company is successfully scaling its physical presence in Tier 3 and 4 cities while maintaining high digital efficiency. Management is pivoting towards higher-margin advisory services and preparing for a strategic entry into the Asset Management business by Diwali 2025.

Highlights

  • Total Revenue reached ₹238 Cr, a growth of 16% YoY.

  • EBITDA stood at ₹87 Cr, reflecting a robust growth of 49% YoY with margins at 36.48%.

  • PAT increased by 50% YoY to ₹48 Cr, with PAT margins expanding by 462 bps to 20.16%.

  • Broking and Distribution segment contributed 60% of total revenue at ₹136 Cr.

  • Advisory segment order book reached ₹586 Cr, with ₹63.5 Cr in new wins this quarter.

  • Wealth products AUM grew significantly by 443% YoY to ₹4,769 Cr.

  • Branch network expanded to 208 locations, up from 149 a year ago.

  • NBFC loan book stood at ₹745 Cr with stable asset quality (NNPA at 2.25%).

Key financials

  1. Revenue ₹238 Cr +16%YoY
  2. EBITDA Margin 36.5%
  3. PAT ₹48 Cr +50%YoY
  4. PAT Margin 20.2%
  5. NNPA 2.3%
  6. Total Loan Book ₹745 Cr

What they filed

Q1 FY27: revenue up 31.9%, net profit up 27.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue247 209 253 235 274 +11%303 +45%307 +21%310 +32%
EBITDA76 60 96 83 89 +17%112 +87%116 +21%105 +27%
Net profit46 31 54 48 56 +22%66 +113%68 +26%61 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹235 Cr Total
  • Broking and Distribution ₹136 Cr 57.9%
  • Advisory ₹60 Cr 25.5%
  • NBFC ₹39 Cr 16.6%

Guidance & targets

Revenue

  • Consolidated Revenue Growth Revenue · next 3-4 years · High confidence 25% to 30%
    On the growth perspective, we expect on a YoY basis is to maintain a healthy growth rate of around 25% to 30% for the next 3-4 years.

    — Ayush Sharma, Head Investor Relations

  • Advisory Order Book Execution Revenue · 24 to 36 months · High confidence ₹586 crores
    Nakul, as far as revenue is concerned for Rs. 586 Cr order book, normally it takes around 24 to 36 month time to book the revenue.

    — Arun Poddar, Group CEO

Other

  • Mutual Fund Launch Other · Before Diwali · High confidence Launch first fund
    Before Diwali, tentatively, we are planning to launch our first fund.

    — Arun Poddar, Group CEO

Margin

  • Government Advisory Margins Margin · next 2-3 years · Medium confidence 22% to 25%
    As far as margin is concerned, in government advisory practice, our margins are around 22% to 25% tentatively.

    — Arun Poddar, Group CEO

Risks & concerns

  • Competitive Pressure in Broking

    medium

    Intense competition from discount brokers, though management believes regulatory changes are leveling the playing field.

    Both acknowledged

  • Cyclicality of Investment Revenue

    low

    Q1 is typically lower than Q4 due to tax planning cycles and year-end incentives.

    Analyst acknowledged

  • Government Receivable Management

    low

    Management claims mission-mode projects (NHAI, Jal Jeevan) have fast-track payment timelines.

    Analyst downplayed

Areas of evasion (1)

  • Specific unit economics per branch were not disclosed beyond the break-even timeline.

Q&A highlights

3 direct
QoQ Revenue Decline Direct
This is a general trend in business because Q4 is always heavy because of various contests and various other business growth activities... So, it's a cyclical kind of thing.

Clarifies that the sequential dip is seasonal rather than a fundamental business slowdown.

Asked by Mandira from Invesco

Advisory Segment Demerger Direct
As far as the demerger of this activity is concerned, as of now, it's not in our plan. We are purely focusing on business growth and getting the major numbers.

Management confirms they intend to keep the high-margin advisory business within the consolidated entity for now.

Asked by Nakul Dev from ND Investments

Competition from Discount Brokers Direct
As the regulator has started being more strict on the compliance perspective, the cost of operation for the discount brokers has started increasing... ultimately everybody will start charging the cost.

Explains Choice's competitive moat through physical service in Tier 3/4 cities and the narrowing cost gap with discount brokers.

Asked by Nikita Shah, Individual Investor

2 min read 5 chapters

Detailed narrative

Strong Financial Momentum and Margin Expansion

Choice International reported a 16% YoY revenue growth to ₹238 Cr in Q1 FY26, but the real story was the significant margin expansion. EBITDA grew by 49% YoY to ₹87 Cr, and PAT surged 50% to ₹48 Cr. This was driven by a 462 bps improvement in PAT margins to 20.16%, which management attributes to their digitized, tech-driven operations where opex does not scale linearly with revenue.

Broking and Wealth Management Scaling Rapidly

The broking and distribution business remains the core engine, contributing 60% of total revenue. Demat accounts grew 29% YoY to 11.5 lakh, while wealth products AUM saw an explosive 443% YoY growth to ₹4,769 Cr. Management highlighted that 85% of branch revenue currently comes from broking, but they are successfully cross-selling wealth products, which now account for 10-15% of branch revenue.

Advisory Segment: A High-Margin Growth Lever

The Advisory business contributed 24% of total revenue with a high PBT of ₹24 Cr on ₹60 Cr revenue. The order book stands at a robust ₹586 Cr, which management expects to execute over the next 24-36 months. Significant new wins include a ₹52.8 Cr World Bank-backed project in Maharashtra and digitization mandates in Bihar and Karnataka, reinforcing their leadership in public sector transformation.

NBFC Strategy and Asset Quality

The NBFC segment reported revenue of ₹39 Cr with a loan book of ₹745 Cr. The focus remains on MSME-focused Micro LAP (average ticket size ₹8-9 lakh at ~20% interest), rooftop solar, and vehicle financing. Asset quality remains stable with NNPA at 2.25%. Management plans to focus on the existing 75 NBFC branches this year to grow AUM before expanding to new states next year.

Strategic Entry into Asset Management

Choice is on the verge of launching its Asset Management business, having received in-principle approval from SEBI. Final approval is expected within a month, with the first fund launch planned before Diwali 2025. The initial focus will be exclusively on ETF funds, marking a strategic move to capture the growing passive investment market in India.

This is an AI-generated summary of a publicly available earnings call transcript.
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