Choice International Ltd Q1 FY2027 Concall Summary

Key Takeaways

• 34% YoY revenue growth, flat sequentially: Consolidated revenue grew 34% YoY, but QoQ growth has been flat for three quarters, partly due to market seasonality.
• ₹900 crore NHIS partnership is about integration, not just capital: The strategic tie-up with NH Investment & Securities aims to bring global institutional flow and cross-border deal access; the capital infusion is described as the smallest part of the transaction.
• Two catalysts set to reshape FY27: The NHIS capital (received in Q2, growth impact from Q3) and the exclusive IPPB wealth management partnership (onboarding from September) underpin management’s expectation of tremendous PAT growth this year.
• Advisory order book provides multi-year visibility: A ₹777 crore consulting backlog plus ~₹191 crore in government mandates supports the next 2 to 3 years, while an investment banking pipeline of over ₹6,766 crore is set to convert over 1 to 1.5 years.
• What to watch next quarter: Initial customer volume from the IPPB partnership starting September, deployment velocity of the ₹900 crore NHIS capital into the MTF and settlement books, and whether branch expansion accelerates toward the 300-350 target by March.

The NHIS Partnership: Capital as a Byproduct

• Strategic intent: The partnership is designed to integrate NHIS’s institutional clients from Korea, Hong Kong, Singapore, and the US who have business activities in India, while also providing Choice’s Indian customers with global market access.
• Capital deployment plan: The ₹900 crore infusion will primarily grow the margin trading facility (MTF) portfolio and the settlement fund provided to customers, both of which are expected to drive higher interest income and brokerage, feeding directly into profitability.
• Timeline: Funds will be received in Q2 FY27, with growth from deployment beginning to show from Q3 onwards.
• Investment banking synergy: Beyond institutional broking, the partnership is expected to generate additional integration in investment banking deals across multiple jurisdictions in the coming years.

Ayush Sharma: "Capital infusion is one part of this particular transition, and I would say a smallest part of this particular whole transaction. The larger objective in having this transaction was to have an integration with the NHIS core strengths."

IPPB & Wealth Management: The Next Growth Leg

• Exclusive partnership: Choice has an exclusive arrangement with India Post Payments Bank (IPPB) to onboard IPPB customers onto its wealth management platform.
• Integration status: System integration with IPPB is expected to complete by end of the current month, with customer onboarding starting from 1st September.
• Revenue visibility: Management declined to provide revenue or PAT guidance for the IPPB channel, stating it is too early and guidance will follow after seeing initial customer volume from September.
• Confidence level: Management expressed high confidence in onboarding a large chunk of IPPB customers, citing the exclusive nature of the partnership.
• Wealth AUM: Already at ₹4,961 crore, supported by continued participation in delivery-led products, providing a base to scale from.

Ayush Sharma: "However, we are very confident that given the exclusive nature of this partnership with the IPPB, we'll be able to onboard a large chunk of customers from the IPPB platform on our wealth management platform."

Advisory & Investment Banking: The Backlog Story

• Consulting order book: ₹777 crore provides visibility over the next 2 to 3 years, with an additional ~₹191 crore in government mandates across e-governance, infrastructure, project management, and financial consulting.
• Margin profile: Government advisory currently maintains around 20% net margin, and management expects to sustain similar margin levels as the business scales.
• Mix shift underway: The advisory mix is expected to evolve from heavy infrastructure advisory toward governance framework development, IT/IT-related consulting, and project management.
• Investment banking pipeline: Over ₹6,766 crore in mandates under execution, with 30 mandates active and one IPO completed during the quarter; a couple of IPOs are ready to launch when market sentiment permits.
• Conversion timeline: The ₹6,600 crore in fundraising mandates is expected to complete over the next 1 to 1.5 years, subject to suitable market windows for industry-specific IPOs.

NBFC: Secured, Steady, and Waiting for ROE

• Asset quality improvement: Gross NPA at 3.78% and net NPA at 2.74%, driven by an in-house proprietary credit assessment engine with mandatory physical verification and central credit team reconciliation, plus collections handled entirely by an internal team.
• Portfolio strategy: Fully focused on secured loans only; the entire incremental loan book in Q1 came from the secured side, with NIM at 11.10%.
• Solar financing target: Portfolio targeted to reach ₹150 crore by end of FY27, with weighted ROI expected to moderate from the current 17-18% to around 15%; the product is secured by solar equipment as collateral.
• ROE gap vs broking: NBFC currently delivers lower ROI than broking and advisory, but management expects higher ROE within one year as certain milestones are achieved; capital allocation to NBFC remains relatively small and is positioned as a diversification play.
• Data gap: Management did not have current solar AUM or comparative yield/cost/ROE metrics vs the traditional MSME book handy during the call, and committed to publishing these in future disclosures.

Ayush Sharma: "As soon as we achieve certain milestones in the NBFC business, this will also start giving a higher ROI as compared to what it is currently giving. So it's just a matter of another -- we expect another one year, and within a year we will start seeing the higher ROE in the NBFC business as well."

Branch Expansion & Distribution: People Before Premises

• Target vs reality: A target of 100 branches this year was stated six months ago, but hardly 10 have opened so far; management did not directly address the shortfall, instead providing a March-end target of 300 to 350 branches.
• The constraint is talent: Teams have been finalized at various locations, but branches will open only as soon as those hires complete their existing employment with current employers and become available.
• Longer-term ambition: The overall growth target remains 800 branches over the next 3 to 4 years, with nearly 100 branches expected to open in the next 6 months.
• DMAT base: Grew 13% YoY, aided by improved onboarding and a broader product suite, supporting the broking and distribution franchise.

Ayush Sharma: "Sir, we have finalized good teams. It is more important that we grow with the right set of people."

New Ventures: AMC & AIF in Build-Up Phase

• AMC as a long-term play: Management views the AMC business as a longer-term venture, not a near-term profit driver; the current focus is on passive products, with active schemes targeted for launch by end of FY27 and the proper growth phase starting from FY28.
• Breakeven timeline: The plan is to bring the AMC business to breakeven in the next 2 to 3 years; AUM guidance is not being provided yet because the current size is small.
• AIF launch: Choice received SEBI approval to act as investment manager to Wealthware Capital Trust, a Category II AIF; the first fund is pre-IPO-focused, targeting opportunities in companies coming up with IPOs, with additional alternative investment strategies under development.
• Mutual fund distribution: Management expects to maintain a 30-35% YoY growth rate in overall AUM.

Ayush Sharma: "AMC is a longer, uh, vision for the CHOICE Group. It's not a shorter-term kind of initiative. We see this as a, uh, as a longer-term venture for CHOICE."

Guidance & Commitments

Key Metrics