Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
Choice International Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤4th Feb 26

Summary : Choice International Limited delivered strong Q3 FY26 results, driven by an integrated financial ecosystem, strategic partnerships, and expansion into underserved markets, with management expressing confidence in sustained growth.

Management Perspective positive : Management expressed pleasure with results, highlighted 'fundamental structural pivot' in the economy, and showed confidence in sustaining EBITDA margins and achieving future growth targets. They also emphasized strategic acquisitions and partnerships.

Concall Report Analysis & Insights

Business Overview

  1. Choice International Limited (CIL) reported strong Q3 and 9M FY26 results, with revenue of INR 309 crores (46% YoY growth) and PAT of INR 66 crores (114% YoY growth) for Q3.
  2. The company is building an integrated financial ecosystem, focusing on India's underserved and emerging markets.
  3. Key segments include broking (58% of revenue, 22% YoY client asset growth), wealth (AUM up 328% YoY), insurance (14% YoY premium growth), and NBFC (14% of revenue, secured lending focus).
  4. Advisory business contributed 28% of total revenue with an INR 748 crore order book, providing 24-36 months of revenue visibility.
  5. Investment banking completed 15 IPOs and has a fundraising pipeline of INR 9,700 crores.

Future Growth Prospects

  1. Operational debut of Choice AMC with a Gold ETF marks a milestone in building a full-stack financial services platform.
  2. Plans to launch index funds, overnight funds, and commodity ETFs in the next fiscal year.
  3. Partnership with India Post Payments Bank (IPPB) will expand wealth management services to 12 crore customers in semi-urban and rural areas.
  4. Targeting 20%-30% AUM growth in the NBFC segment, focusing on retail loans and physical credit underwriting.
  5. Acquisition of Ayoleeza Consultants will expand advisory business into new geographies and increase order book.

Management Insights

  1. The Indian economy is undergoing a structural pivot with capital moving from physical assets to financial markets.
  2. Resilience of rural and semi-urban consumers, who are increasingly aspirational and digitally enabled, drives growth.
  3. Union Budget '26-'27 reinforces financial discipline and deepens India's Capital Market ecosystem.
  4. Performance reflects steady progress in building an integrated financial ecosystem and executing strategy.
  5. Focus remains on technological innovation and deepening presence in India's underserved markets.

Signs of Skepticism

  1. Analyst asked about sustainability of EBITDA margin expansion given rising employee costs, which management attributed to stable fixed costs and revenue growth.
  2. Questions arose regarding a 6% decline in credit card issues and client onboarding degrowth, which management explained as temporary tech glitches and contest-related adjustments.

Risk Factors

  1. Industry adjustments to regulatory changes in the derivative space could impact broking margins.
  2. Parts of the unsecured lending markets are under pressure, though CIL focuses on secured lending.
  3. Temporary technological glitch affected credit card client onboarding for 40-45 days.
  4. Client onboarding for equity saw a slight degrowth due to withdrawn contests, expected to normalize in Q4 FY26.

Good To Know

  1. 9M FY26 revenue was INR 831 crores, with PAT of INR 170 crores.
  2. EBITDA margin expanded to 37.92% in Q3 FY26, up from 29.2% YoY.
  3. Stock broking client assets reached INR 60,500 crores in Q3 FY26, a 22% YoY growth.
  4. NBFC segment's NNPA remained stable at 2.83% as of December 31, 2025.
  5. Average MTF book is between INR 370-400 crores, with robust internal risk management systems.

Key Drivers

  1. Gold ETF launch expands product offerings.
  2. IPPB partnership boosts rural customer reach.
  3. Acquisitions enhance advisory business scope.
  4. Strong financial performance drives confidence.

Key Analyst Discussions

Competitive Environment

  1. Q: How does Choice plan to expand market share and active clients?
  2. A: Phygital business model with physical presence and technology, focusing on semi-urban and Tier 3 geographies, helps maintain stable client acquisition costs.
  3. Q: What strategies are in place to accelerate client acquisition in Tier 2 and Tier 3 cities?
  4. A: Physical expansion of branches and CBA network, complemented by a new digital client acquisition team, aims for lower customer acquisition cost (CAC).

Market Trends & Consumer Behavior

  1. Q: What is the potential revenue and margins from the India Post Payments Bank project?
  2. A: The IPPB partnership opens a huge distribution channel for onboarding more customers, especially in semi-urban and rural geographies, rather than immediate revenue/margin focus.

Financial Highlights

  1. Q: What are the key drivers behind the 45% YoY revenue growth in Q3?
  2. A: Increased retail investor trading activities and stable operating costs led to margin expansion in broking and advisory.
  3. Q: Is the EBITDA margin expansion sustainable given rising employee costs?
  4. A: Management foresees sustained and further expanded EBITDA margins due to revenue growth outpacing fixed and operational costs.
  5. Q: How will management manage funding costs and liability mix to support 20-30% AUM growth?
  6. A: Physical presence and advanced technology tools will maintain high collection efficiency and lower credit costs.

Product Composition

  1. Q: What are the plans for Gold ETF and active strategies in that segment?
  2. A: Currently offering Gold ETF, with plans for index funds, overnight funds, and commodity ETFs this fiscal year, followed by active strategies.
  3. Q: What is the plan to sustain 58% revenue growth amid POSP expansion in insurance?
  4. A: Targeting a 25% growth rate in insurance distribution, catering to both corporate and retail customers.

Strategic Considerations

  1. Q: How will the recent acquisition of Ayoleeza Consultants contribute to FY26 execution in infra consulting?
  2. A: Ayoleeza's credentials will expand CIL's reach into new geographies, securing more contracts and increasing the order book.
  3. Q: What are the plans around Capex for FY26, particularly on technology investments or branch expansion?
  4. A: Capex on tech is minimal, mostly opex. Branch expansion costs are not significant (INR 3-5 lakhs per branch).