Choice International Ltd (CHOICEIN) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Q2 and H1 FY27 earning conference call of Choice International Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Forum Gosher from Adfactors PR, Investor Relations. Thank you and over to you, ma'am.
Forum Gosher (Adfactors PR): Good evening everyone. I'm Forum Gosher from Adfactors PR Investor Relations. On behalf of Choice International Limited, it is my pleasure to welcome you all to the Q2 and H1 FY27 earnings conference call. Joining us on the call today from the management team are Mr. Arun Poddar, Chief Executive Officer, Mr. Suyash Patodia, Joint Managing Director, and Mr. Ayush Sharma, Chief Financial Officer. We will begin today's call with opening remarks from the management, following which we will open the floor for Q&A session. Before we begin, I would like to remind everyone that certain statements made during this call may be forward-looking in nature. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Choice International Limited undertakes no obligation to publicly update or revise any forward-looking statements based on subsequent events or
Forum Gosher (Adfactors PR): With that, I would like to hand over the call to Mr. Arun Poddar to deliver his opening remarks. Thank you and over to you, sir.
Arun Poddar (Choice International Limited): Thank you. Good afternoon, everyone, and welcome to Choice International Limited's earnings conference call for Q2 FY '27. For those joining us for the first time, Choice is building a diversified financial services and a consulting institution positioned around three long-term opportunities in India: the growing financial need of household, the capital requirement of the businesses, and the country's infrastructure and the public sector development. Our strategy is to build multiple sources of earning with each business benefit from the group's distribution, relationship, expertise. Our businesses are organized into three broad categories: first, broking and distribution, which brings together our broking, wealth and insurance distribution businesses. Today, it serves more than 17.5 lakh customers throughout 200-plus branches and supported by a wider network of more than 70,000 business associates. This reach enable us to deepen customer relationship by addressing a broader share of their investment and the protection need. Second, advisory. Advisory comprising investment banking and the government consulting. Investment banking help businesses access capital while the government consulting provide expertise across infrastructure and the public financial management. Together, these businesses allow us to participate in corporate growth and India's development priorities. Third is NBFC. In NBFC, our retail and MSME lending businesses, which addresses the financial need of selected borrower segment through focused underwriting and the local market understanding. Let me now turn to the environment in which these business operates. The geopolitical backdrop has created uncertainty through disruption by energy supplies, shipping cost, and the global capital flow. Despite these pressures, India's domestic growth driver remained resilient with the Finance Ministry projecting 7.3% of real GDP growth for FY '27, supported by domestic demand, sustained investment activities, and the resilient financial sector. While energy price volatility and the tighter global financial condition remain risk, this outlook provide an encouraging foundation for India's financial service and the consulting industry. Indian equity markets have tested investors' patience with FII remaining net seller for 16 consecutive months and the Sensex declining approximately 11% despite sustained DII support. However, monthly SIP contribution of rupees 32,490 crore in September '26 demonstrate the resilience of domestic investor flow, providing an improvement counterbalance to foreign foreign selling and while prolonged weakness challenges conviction, we believe it also create a opportunity for a patience investor to acquire quality businesses at more attractive valuations. Moving on now to infrastructure spending. Public investment continued to provide a strong foundation with a center budgeting of approximately 12 lakh crore in capital expenditure for FY '27 and spending approximately 6.5 lakh crore during the first half. Private investment is also contributing to the pipeline with infrastructure accounting of approximately 2.4 lakh crore to project cost sanctioned by banks and the financial institution, led by power, road, and the bridges. Turning to Indian capital market, investor participation has remained encouraging with approximately 1.6 lakh 1.6 crore demat account added in H1 FY '27.
Arun Poddar (Choice International Limited): setting a launch, provide an encouraging backdrop for investment banking with realistic valuation and issuer readiness remaining assessional to successful execution. Second, the industry's MTF book moderate from approximately 1.6 lakh to 1.5 lakh crore at the October end. I recently read an article raising concerns about MTF unwinding. However, similar adjustments have occurred during previous market conditions. With the current book spread across more than 2,200 stocks, we do not view the moderation along as a sign of systematic risk. Moving to insurance, India's relatively low penetration continue to offer a long-term growth opportunity, although the industry's facing uncertainty around proposed changes in commissions and the distribution expenses. These proposal could affect intermediary revenue and margins, with the extent depending on the final framework and the product mix. Moving to NBFC, RBI's August data showed credit growth of approx approximately 16% year-on-year, including growth in retail lending. However, the October repo rate increase from 5.25 to 5.50 could raise funding cost as a borrowing rate, reinforcing the importance of protecting lending spread, range and the monitoring collections. Against this backdrop, let's performance. Q2 FY '27 was the strongest quarterly in our history, with a revenue of 379 crore, up to 33% YoY basis, and PAT of 69 crore, up 23% YoY basis. These results reflect the collective contribution of our businesses and the strength of our diversified business model. We've all, we have also announced a bonus issue in the ratio of 1:1, and I would like to thank to our shareholder for their continued trust and the support. Our CFO will take you through the detailed financial performance of each business later in the call. I will focus on the key operating and the strategic development, beginning with the landmark partnership in our broking business. Last week, we completed the 900 crore strategic investment by NH Investment & Securities of South Korea in Choice Equity Broking, marking an important chapter in Choice's journey. This investment strengthens our capacity to expand the MTF book, while the partnership opens opportunities across institutional broking, wealth, investment banking, and the asset management. Moving to the wealth distribution, an encouraging trend is growing scale of our product distribution. Product distribution reaches 16,36 crore in H1 FY '27, over 3 time the year-ago level and more than double in the full-year FY '26 volume. Moving on the government advisory, our closing order book stood at 710 crore, providing revenue visibility as we focused in timely execution, quality delivery, and the disciplined collections. An important milestone in the proposed acquisition of Feedback Infra was the receipt of a Letter of Intent from the Resolution Professional, confirming the Committee of Credit approval for our resolution plan. The advance this advancing the acquisition process, with completion remaining subject to NCLT approval and other applicable requirements. Moving on the investment banking, Q2 FY '27 was a special quarter for us, with five IPO aggregating approximately INR680 crores, listing across the mainboard and the SME platform. Investor response was encouraging, with one offer subscribed approximately 177 times. This execution momentum continued into October as well. In insurance, during Q2 FY '27, we've generated 81 crore in premium across our over 75,000 policies, while remaining watchful in proposed regulatory changes that could reshape distribution economics. Moving to our NBFC business, the total loan book stand for 935 crore. Our focus remain on growing the retail businesses, supported by the disciplined underwriting and the prudent risk management. Moving to our AMC business, today marks the closure of our NFO for our first actively managed scheme, the Choice Large &
Arun Poddar (Choice International Limited): Care Fund. The initial response has been encouraging despite challenging market conditions, and we'll share the collection figures shortly. I will now request our CFO, Mr. Ayush Sharma, to take you through the consolidated results, the financials, and the operating performance of these businesses. We will then be happy to answer all your questions. Over to Ayush.
Ayush Sharma (Choice International Limited): Thank you, sir. Good afternoon, everyone. I will begin with our consolidated financial performance for the quarter ended September 30, 2026, compared with the corresponding quarter last year, before taking you through our business verticals, covering the key financial results and operating drivers for each. Q2 FY '27 was the strongest quarter in Choice's history with record consolidated revenue of Rs. 379 crores, which is up 33% from 284 crore in the corresponding quarter last year. EBITDA stood at roughly around 131 crore rupees, growing 32% year-on-year, while maintaining a margin of 34.5%. Profit after tax reached to approximately 70 crores, increasing 23% year-on-year, with a PAT margin of 18.3%. Let me now take you through the revenue and profitability of our business verticals, beginning with Broking and Distribution. Broking and Distribution segment contributed close to around 52% of consolidated revenue during the quarter, reporting revenue of Rs. 178 crores and a profit before tax stood at for approximately 42 crore rupees. We added roughly 1.73 lakh demat accounts, taking our total count to 13.78 lakh number of demat accounts, which is representing a 14% year-on-year growth. Our distribution network now comprises 218 branches, while clie- client assets under custody stand at Rs. 66,300 crores. Our ADTO across all segments declined by 12% during the quarter, broadly in line with the market trends. Our MTF book now stands at Rs. 463 crores and remain a key growth priority, with funds received from NH Investment & Securities and intended primarily to support its expansion. Turning to our platforms, we are proud of the progress we continue to make with FinX, constantly improving its clean, intuitive interface to bring trading, investments, research, and portfolio access together in one place. Building on FinX, we have developed StrikeX, which caters to sophisticated retail traders seeking deeper market insights, with features such as order flow analysis, volume bubbles, et cetera, that highlights buying and selling activity at every tick and larger trades respectively. Order flow analysis is currently offered by only two other brokers in India, positioning Choice's platform for its next phase of growth. Moving to Wealth Distribution, our total AUM stood at approximately Rs. 6,000 crores, comprising mutual fund AUM of approximately 4,100 crores, PMS and AIF at around Rs. 291 crore. Within mutual funds, equity AUM grew 49% year-on-year to around 3,000 crores from 2,000 crores a year ago, while PMS and AIF A- AUM increased 127% from 1- 128 crore rupees. Structured and fixed income product distribution reached 1,636 crores in H1 FY '27, compared with 512 crores a year earlier and surpassing the full year FY '26 volumes of 745 crore rupees. A quick update on the our partnership with India Post Payments Bank, the pilot launched in selected cities has received an encouraging response, onboarding over 25,000 customers and generating an AUM of roughly around 1.12 crores. While it is too early to assess the revenue contribution, our immediate focus is on building awareness and establishing a foundation for growth. This- These numbers of customers and AUM has been recorded over a pilot of roughly around 38 number of days. On the Insurance front, we sold roughly around 75,000 number of policies, generating premiums of Rs. 81 crores during the quarter. If the proposed framework is implemented, there could be some pressure on the commissions income, with the extent depending on the final guidelines and our product mix. Moving to Advisory business, it contributed approximately 36% of consolidated revenue during the quarter, with revenue of Rs. 145 crores and a profit before tax of Rs. 45 crores. On the advisory side, our existing order book stands at 710 crores. Looking ahead, once the Feedback Infra acquisition is completed, its credentials and expertise should help us enter new market and bid for larger value contracts with the potential for better margins. On the Investment Banking, we had a strong year so far, with momentum continuing into
Ayush Sharma (Choice International Limited): as we take on larger IPO mandates. Looking ahead, our pipeline comprises 24 IPO mandates with an estimated fundraising of Rs 6,210 crore. Moving to NBFC business, it contributed approximately 12 12% of consolidated revenue during the quarter with a revenue of 46 crores and profit before tax of Rs 4 crores. Thank you for your continued interest in Choice International. We'll now open the floor for questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the questions. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you are you are requested to restrict your question to only one or two questions per participant. Should have a follow-up question, we request you to rejoin the question queue. The first question is from the line of Anirudh Sharma from Akaan Investments. Please go ahead.
Anirudh Sharma (Akaan Investments): Good evening, sir. Am I audible?
Ayush Sharma (Choice International Limited): Yes, Anirudh. Good evening, you are very well audible.
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