Choice International Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Steady 16% YoY revenue growth, cyclical QoQ dip: Q4 is seasonally heavy due to contests and tax planning, making Q1 lower; management calls this a normal cycle, not a one-off.
• Advisory order book swells to ₹586 Cr: Recent wins include a ₹52.8 Cr World Bank-backed Maharashtra project and a ₹67 Cr digitization mandate, giving multi-year revenue visibility.
• Wealth AUM surges 443% YoY to ₹4,769 Cr: The Arete Capital acquisition signals a push to build wealth management into a standalone vertical, targeting HNIs and UHNIs.
• Margins expand 462 bps YoY, tech keeps them sticky: EBITDA margin hit 36.48% as digitized operations mean opex does not rise in lockstep with revenue; management sees room for further slight improvement.
• What to watch next quarter: SEBI's final nod for the AMC license, the launch of the first ETF fund before Diwali, and any M&A disclosure as the company actively scouts for deals.

Advisory: The Multi-Year Backbone

• Order book at ₹586 Cr provides revenue visibility over the next 24 to 36 months, anchored by large government digitization and transformation mandates.
• Maharashtra project (MahaSTRIDE): A ₹52.8 Cr, World Bank-backed engagement to set up a district strategic unit in Chhatrapati Sambhaji Nagar Division, with revenue booked over 5 years.
• Digitization mandate: A new win worth nearly ₹67 Cr spans Bihar, Karnataka, and the Bharat Net program for PACS computerization and rural broadband connectivity.
• Sectoral expansion underway: The advisory practice is now targeting railways, ports, and telecommunications as government focus shifts toward these sectors.
• Margins in advisory: Government practice margins run at approximately 22% to 25%, with revenue recognized over 2 to 3 years.

Arun Poddar: "As of now, it's not in our plan. We are purely focusing on business growth and getting the major numbers. As of now, there is no plan in terms of demerger or disengaged services."

Broking & Wealth: Scale and a New Vertical

• Broking revenue at ₹136 Cr, up 5% YoY, with demat accounts growing 29% YoY to 11.5 lakh and client assets up 16% YoY to ₹47,800 Cr.
• Wealth AUM grew 443% YoY to ₹4,769 Cr, and management expects wealth management to emerge as a separate vertical out of the broking segment, driven by the Arete Capital acquisition.
• Arete Capital acquisition closed last quarter, bringing expertise to expand institutional wealth, HNI, and UHNI segments.
• Branch economics: 85% of branch revenue comes from broking, 10% from wealth products, and 5% from lending; a new branch reaches break-even within six months.
• CBA network moat: The Choice Business Associates network, started in 2019, onboards individuals like GST consultants and insurance agents in Tier 3 and below geographies, trains them, and pays out by product and level.

Ayush Sharma: "This clearly lays out the way forward that ultimately everybody will start charging the cost. Now, it will be the game of service who is providing what level of service to the client, especially in the Tier 3 and Tier 4 geographies."

NBFC: Consolidate First, Then Expand

• NBFC revenue at ₹39 Cr with PBT of ₹7 Cr; loan book stands at ₹745 Cr, of which retail is ₹596 Cr.
• Asset quality is healthy with NNPA at 2.25%; the business leverages the Choice Money app and physical network for customer accessibility.
• Product mix: Three major products: Micro LAP for MSMEs (avg ticket ₹8-9 lakh, avg rate ~20-21%), rooftop solar loans, and vehicle loans.
• Current year strategy is consolidation: Management plans to stay focused on the existing 75 branches across Rajasthan, Gujarat, MP, Delhi NCR, and parts of Maharashtra, growing AUM in these branches before expanding to new states next year onwards.
• Customer geography: Approximately 70% of customers are from Tier 3 and below geographies, which remains the largest focus for expansion over the next couple of years.

New Engines: AMC, Insurance, and Investment Banking

• AMC launch imminent: SEBI conducted its final visit last week for final approval; management tentatively expects the go-ahead within one month and plans to launch the first fund, an ETF, before Diwali.
• Insurance expansion: The corporate insurance segment is more lucrative; the company is expanding to industrial zones and clusters to reach larger corporates, while also expecting retail to grow.
• Investment banking pipeline: Choice has concluded 7 IPO transactions over the last 1.5 years and holds 24 ongoing mandates with a tentative fundraising pipeline of over ₹6,600 Cr, where it will act as lead merchant banker.

Margins & Operating Model

• EBITDA margins improved to 36.48%, a 462 bps YoY expansion, while PAT margins reached 20.16%.
• Tech-driven operating leverage: All operations are digitized with no manual processes; opex does not increase directly in sync with revenue growth in the majority of businesses.
• Margin outlook: Management expects margins to remain at similar levels with room for a little improvement, driven by technology.

Guidance & Commitments

Key Metrics