Q4 24/25

Apr 23, 2025

Summary

FY25 revenue rose 21% to ₹921.7 crore and PAT increased 24% to ₹162.7 crore. Growth plans emphasize branch expansion, NBFC lending, broking and wealth, while acquisitions and a planned ETF launch broaden the platform.

Ladies and gentlemen, good day, and welcome to the Q4 and FY 2025 earnings conference call of Choice International Limited. As a reminder, all participant lines will be in the listener 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 the star, then zero on your touchtone phone. I now hand the conference over to Ms. Aashvi Shah from Adfactors PR Investor Relations. Thank you, and over to you, ma'am. Thank you, Steve. Good evening, everyone. On behalf of Choice International, I would like to welcome you all to the maiden earnings conference call for Q4 and FY 2025. Today on this call, we have with us from the management, Mr. Arun Poddar, Group CEO, Mr. Ajay Kejriwal, Executive Director, and Mr. Ayush Sharma, Head of IR. We will begin the call with the brief opening remarks from the management, followed by a Q&A session. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause the actual results or our projections to differ materially from those statements. Choice International will not be in any way responsible for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements. I would like to now hand over the call to Mr. Arun Poddar for his opening remarks. Thank you, and over to you, sir. Good evening, everyone. Thank you for joining us today for our first-ever earnings conference call. We are glad to interact with each one of you today. As we step into the new financial year, we are seeing encouraging signs of resilience and momentum in the Indian economy. Despite global uncertainties, domestic fundamentals remain strong, backed by steady GDP growth, robust credit demand, and a growing appetite for investment. The stock market too reflects the optimism with investor confidence supported by policy reforms, rising consumption, and digital innovation. At Choice International, we believe this is an opportune time to build on our strength and continue creating value across all our verticals. Since this is our first interaction with many of you, I would like to begin with a brief introduction to our company, our business model, and the key verticals that define our operations. Choice International Limited is a leading financial service company, with over a decade of experience in delivering technology-driven financial services. We have built a diversified financial service ecosystem that caters to a broad spectrum of 13 lakh-plus clients across India, ranging from retail investors to institutional clients, with a strong presence in Tier 2 and Tier 3 cities. Our business is structured in three verticals, each focused on creating value through specialized offerings. Let me first highlight each of these verticals. Broking and distribution. The vertical contributes around 62% of our total revenue, and it caters to equity broking, wealth management, and insurance distribution. Our major growth driver for the vertical has been our stockbroking business. in FY 2025, we have a total of 10 lakh-plus Demat accounts, serving more than 241,000 active clients, and with total client assets of ₹41,000 crores, a growth of 16% YOY basis. Under wealth product distribution, we have an AUM of ₹5,500 crore-plus, a 793% growth on YOY basis. We offer a comprehensive suite of products under this business. A major milestone this year for the business was in-principle approval from SEBI to sponsor and establish a mutual fund. This approval allows us to set up an asset management company and a trustee company, expanding our financial services portfolio. By entering the mutual fund industry, we aim to empower investors with tailored investment products and create value through disciplined and transparent fund management. Another major step we have taken this year is the acquisition of Arete Capital Services, a wealth management firm with an AUM of ₹4,400 crore-plus. This strategic acquisition significantly improved Choice Broking's wealth business division, increasing its total AUM nearly fivefold. Our last leg of our broking and distribution is our insurance distribution arm, where our extensive network helps us cater to both retail and SME segments. Our offerings include all the insurance products like life insurance, health, and motor. In Q4 2025, we have sold 52,000-plus insurance policies, generating a premium of ₹93 crores. We have 40-plus partnerships with all the leading broking companies. Our PoSP model is working really well for us, enabling us to expand our reach pan-India. In FY 2025, we have 7,300 PoSPs registered, driving significant growth in our distribution network. We are highly optimistic about the growth potential of all the businesses within our broking and distribution arm and are actively taking the right steps to scale each one of them. Moving to our second business, NBFC. The business operates our subsidiary, Choice Finserv, with a focused approach to retail lending tailored for MSMEs and individuals in semi-urban and rural markets. Our portfolio spans MSME business loans, vehicle loans, and solar financing, supported by tech-enabled credit assessment framework and a dedicated in-house collection team for effective risk management. As on FY 2025, our total loan book stands ₹768 crore, with a retail loan book of ₹629 crore. Our CRAR for the year stands 38.62% with a 0.83% of NNPA. Our robust underwriting process is furthered by partnership with all the major bank and financial institutions, ensuring a well-diversified liability portfolio. Additionally, our proprietary app, Choice Money, is enabling customer to access our offering with the greater ease and efficiency. A key highlight for the vertical this year has been the acquisition of the retail lending business of Sureworth and the Paisabuddy through a slump sale transaction. This strategic move has significantly boosted our AUM and further strengthened our position in the lending landscape. With the strong support from the government for the MSME sector, we remain highly optimistic about the growth of our lending business. Our focus is on bridging the credit gap and addressing the key challenges faced by the MSME to enable their sustainable growth. Our third and the final segment is the advisory business, which contribute 26% of our total revenue. This segment comprises two key verticals, government advisory and the investment banking. Through our subsidiary, Choice Consultancy, we offer end-to-end consulting and advisory service to the government infrastructure project. Leveraging deep domain expertise, we support large scale initiative across 10 states. Our robust order book currently at INR 500 crore plus is a strong testament of our execution capability and the sectoral knowledge. We have been instrumental in delivering projects at the grassroots level, with notable work under the flagship initiatives such as Jal Jeevan Mission. With increased government focus and capital allocation for our infrastructure development, we are very well positioned to become a preferred partner for public sector projects across the country. The other vertical under this segment is investment banking, where we have played a very key role in advising a range of corporate business, corporate clients, and have successfully executed several IPO mandate. Till now, we have concluded six IPO transactions successfully, and 22 are ongoing mandate with a tentative fundraising pipeline of INR 6,450 crore plus. The growth of our business vertical is lead by the strong foundation provided by our Choice Business Associate, who serve as a trusted partner in delivering the services across India. In FY 2025, I am proud to share that our CBA network has grown to over 53,000 partners, creating a pan-India presence and reinforcing our commitment to inclusive financial access. Technology has always been our core for the growth strategy. Backed by a strong in-house tech team, we have successfully developed and launched platforms like Choice FinX, Choice Money and Choice Connect. These platform are continuously upgraded with the new feature, ensuring a seamless and intuitive experience of our customer and the partners. Today, our footprint span a robust network of 192 branches and 49 project offices, supported by a dedicated team of in-house tech experts, serving a diverse and growing clientele base. We remain committed to empowering India's aspiration by democratizing access to financial product and delivering the joy of earning through innovation, inclusion, and the customer first solution. With the deep industry expertise and the forward-looking approach, we aim to be a catalyst for growth, prosperity, and the positive change. Despite recent challenges, we remain in our commitment to delivering long-term value of our client, shareholder, and society, guided by the principle of integrity, fairness, and the innovation. I would like to now hand over to Ayush Sharma, our Head of Investor Relations, who will take us through the financial performance for the quarter and the year-end. Thank you. Thank you very much, Arun sir. While Arun sir has given a detailed understanding on each of our business verticals, I would like to lead you all through the financial performance for the quarter and the year ended FY 2025. Choice reported a revenue of INR 255 crore for Q4 FY 2025, a growth of 18% year-on-year basis. EBITDA for Q4 FY 2025 stood at INR 98.30 crore, growth of 42% YOY, with EBITDA margins of 38.54%. PAT for the quarter stood at INR 53.5 crore, a growth of 36% YOY, with PAT margins of 20.98%. This has resulted in increased margin by 277 basis points. On a full year basis, we reported a total revenue of INR 921.7 crore, growth of 21% on YOY basis. EBITDA for FY 2025 stood at INR 295.9 crore, growth of 30% on a YOY basis. EBITDA margins stood at 32.10%. Similarly, PAT for FY 2025 stood at INR 162.7 crore, a growth of 24% on YOY basis, with PAT margins of 17.65%. On the segmental front, the broking and distribution business clocked in a total revenue of INR 551.2 crore, a significant growth of 21% on a year-on-year basis. PBT for this vertical stood at INR 134.5 crore. The NBFC business clocked in a total revenue of INR 114.8 crore with PBT of INR 7.4 crore. GNPA and NNPA stranded to 2.49% and 0.83% respectively in this particular business vertical. Lastly, the advisory business had a total revenue of INR 250.3 crore with PBT of INR 79.8 crore. Our total debt on the book stands at INR 677.2 crore as on FY 2025. Cash and cash equivalents for FY 2025 stands at INR 138.8 crore. With this, I would like to open the floor for questions. Thank you. 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 their touch-tone telephone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ayush Sharma from Altar Capital. Please go ahead. Yeah. Hi. Thank you for giving me the opportunity and congrats on a decent set of results. I just had a couple of questions. Firstly, on physical expansion, on branches, what is the exact outlook? Secondly, how is the growth of wealth business evolving? Finally, how will use of technology contribute to your growth? Yeah, these are my questions. Thank you. Thank you. Thank you, Ayush, for the wishes. This year, when we started the year, we were at 115 number of branch offices. On the closing, we are at 192 branch offices. We have significantly expanded. For the upcoming financial year, we are planning to expand our branch network further by another 100 branches. On a longer-term basis, if we have to take a five-year plan, we are planning to have our own branch office at almost all districts, which are roughly around 800 districts across India. There is a major reason why we are largely focusing on the branch network. Because even today in the financial services space, across semi-urban geographies or tier 3 and below geographies, whenever we talk about any financial services, the customer mindset is that they require a physical space. This we have seen across various other industries also, be it edtech, be it likes of Lenskart who started online and eventually opened a store on the ground to service to this particular customer segment. So the similar thing is there for the financial services space also. We are largely bullish on the new entrants in the financial services space, which are going to come from tier 3 and below geographies only, and we will be readily available on the ground with our physical branch network for these set of customers. What was the another question, Ayush? I missed. Thanks. Yeah, it was on your wealth business and how is the business side going? How is it evolving, basically? Okay. So the second question on the wealth business is we are largely focusing on the retail customers as well as the HNI and institutional clients. We had built a distribution of retail mutual fund and wealth products with our own team. With the acquisition of Arete Capital, we have onboarded the HNI and institutional clients also, because the Arete forte was only institutional space. So we are planning to grow on both the business models. As far as the technology is concerned, technology works as an enabler. I would like to proudly say that our technology is no less than any other competitor in the industry. Even I would say in some spaces, we are even better than the competition. However, at the same time, business model largely remains on the physical presence, which is supported by the technology for the faster execution and seamless client servicing. So that's our view on the tech part. All right. Understood. Thanks a lot and all the best. Thanks. Thank you. The next question is from the line of Ritika Dua from Bandhan AMC. Please go ahead. Hello, Ritika, ma'am, your line has been unmuted. Please go ahead with your question. We will move on to the next question. It's from the line of Raman KV from Sequent Investments. Please go ahead. Hello, can you hear me? Please go ahead. First, with respect to the advisory services, we have INR 500 crores order book. Can you give how much of that or what percent of the order book is with respect to Jal Jeevan Mission and roads and highways, like the order book split, and what is the execution timeline like? Okay. When it comes to the advisory order book, the tentative average timeline for execution of one project ranges from 24 months to 36 months time. Of course, it depends what kind of services we are providing. If it is a DPR, it is completed average within 9 to 10 months time. If it is a combination of DPR and PMC both, the average goes to 24 to 36 months time. We are largely focused on the mission projects of the government. If you will see our history, when we started our advisory business roughly around 2014, 2015, the larger focus of the government was onto the road and highway projects, and so was the focus of our company as well. We designed and supervised more than 3,000 kilometers road in the initial 2, 3 years. In the second tenure of the NDA government after 2019, the focus shifted to the Jal Jeevan Mission. That was a mission project of the central government, and so was our company's focus onto the water pipeline and designing and supervision kind of projects. We are working in line sync with the government's vision so that we are able to execute projects fast, smooth, and on the timeline. As far as today's order book is concerned, I would say roughly around 60%-65% comes from water-related projects, and the remaining 40%-35% comes from other projects. Can you repeat, sir? Sorry. The order book. I mean that part. Hello? You are asking to repeat the percentage or- Yeah, the split. Okay. The split for the water-related projects, the total is roughly around 65%, and for other projects it is roughly around 35%. Okay. Got it. With respect to NBFC, the NBFC's book has grown by 53%, like the net worth. I just want to understand quarter-on-quarter, what was the reason for this huge growth in the book of the NBFC business? Okay. In Q3, we had acquired a retail lending business of Paisabuddy Finance Private Limited, a Jaipur-based NBFC, and a distribution business of Sureworth Financial Services Private Limited, another distribution company based out of Jaipur, under a slump sale transaction. This transition has led to a significant jump into the AUM of the NBFC. Oh, okay. Sir, can I get the interest yield with respect to the NBFC business? Okay, so on a consolidated book level, the yield amounts to roughly around 20.5%-21%. 20.5% to? 21%. Okay. Sir, what is the guidance with respect to the NBFC business as well as the distribution of mutual fund business for the FY 2026? Our focus in the NBFC is largely onto the MSME customers who are in the semi-urban and rural geographies. The largest product which we do in the NBFC space is LAP, loan against properties, where the ticket size ranges from INR 6 lakh-INR 8 lakh per customer. However, as we grow in size, our focus will go to prime borrowers also, where the ticket size will come to somewhere around INR 12 lakh-INR 15 lakh and a slight decline in the average interest rate will also be there. However, at the same time, the distribution cost and the credit cost is also lower for that particular customer segment. You can expect a growth of somewhere around 25%-30% CAGR in the NBFC business over a couple of years. At the same time, in the NBFC, our one major focus is onto the co-lending business also, where we are entering into partnerships with the various banks and larger NBFCs to provide lending as a service, and where we are onboarding the customer, and it will be booked under the 80-20, 90-10 kind of ratios. That's more onto the NBFC business. On the wealth space, as I had mentioned, we are focusing on both retail as well as the institutional HNI customers. Our focus on the retail space is to leverage our existing branch infrastructures, where we are going to utilize our existing team, which is there at the branches to distribute the mutual fund products, mutual funds, and other wealth-related products. On the central level, we have a dedicated team for the HNI and institutional clients. That's how we are planning to grow the wealth-related business. Okay, sir. Sir, just one last question with respect to the NBFC. You mentioned that majority of the loans LAP, loan against property. What percent of the AUM is LAP? Out of around INR 768 crore, roughly around INR 430 crore is LAP. Around INR 125 crore is used commercial vehicle. The rest is solar and other loans. Okay. Thank you, sir. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press * and one. The next question is from the line of Shubham Purohit from SBI Securities. Please go ahead. Yeah. Hello, am I audible? Yes. Yeah. Yeah. So congratulations on a good set of results, especially in this challenging environment. My first question is with respect to how we are placed against competitors like Angel One and Motilal Oswal, and if you could highlight what is our moat compared to these competitors. There is a difference of approach, how we are taking the business model. We largely focus on the physical infrastructure. We largely focus on the customers who are into semi-urban. Of course, digital and physical distribution have different set of challenges and different set of benefits. I would say that we have been consistently growing over the last 6 years. Of course, with a high rate of CAGR, we have been growing roughly around 55%, 60% kind of number in the revenues and roughly around 70% in PAT. At the same time, in the broking business, we are expecting to grow at 30%, 35% kind of CAGR over the next couple of years also. The largest difference between the competitors and us is we prioritize the handholding of customers across their whole financial services journey, be it investments, be it the loans, be it stock market trading, et cetera. That's the kind of guidance we can give you on this question. Okay. Thank you, sir. For one last question, as you have seen in the recent past, the company has done a lot of acquisitions. Are we planning to plan for more acquisitions going forward? If so, how are we planning to fund this? Of course, we have done a couple of acquisitions over the recent years, and we intend to continue the same. There is no doubt about it. As far as the funding for the acquisitions are concerned, we have enough internal accruals to support that. Okay, sir. Thank you. That will be all. Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and one. The next question is from the line of Nayan Gala from Ortiga Wealth. Please go ahead. Yeah, thanks for the opportunity. Can you please throw some light on the advisory business? Since this is an unrelated business, it would be great if you could give some idea as to how does this business model work, how many projects in the pipeline and overall guidance for this vertical. Okay. I will give you a brief. There are two sub-segments within the advisory business, Nayan. One is the government advisory and second is the investment banking. When it comes to government advisory, we do a couple of services for the government infrastructure projects as well as financial services projects for the government. In infrastructure, we do prepare detailed project reports. Think of a road and highway being constructed. There is a design required to be prepared, the complete document. What will be the route, what will be the material used, what will be the cost to construct, what will be the benefit of that particular project, socioeconomic impact, et cetera. All this information is consolidated into the detailed project report, which is called a DPR. We do prepare the detailed project report, we do conduct the feasibility study, and once the construction starts, we do the supervision. As you have rightly said, this is a kind of a different business than the other group businesses. However, at the same time, this diversification supports us in the challenging or turbulent times as the markets have performed not very well over the last couple of months. However, at the same time, we have seen a surge in the government advisory business where we were able to execute government projects and get the revenue. You can see this is very well visible in our numbers also that this balances the market macroeconomic scenarios. That is why we are into this particular business. Thanks. Got it. Secondly, can you give some guidance on your insurance business and how are we planning to grow? On the insurance business part, again, in insurance also, we do both retail as well as corporate. In retail, we do largely the life, health, and motor, and in corporate we do liability insurance, group mediclaim, institutional products like credit shield, et cetera. We have seen a very good growth over the last couple of years in the insurance business, and we are very bullish that we will be able to achieve more from both the segments. As we grow on the distribution space across the broking business, we will be able to do more cross-sell for the retail customers and for the institutional desk, we have a dedicated team here in Mumbai as well as couple of other branches also in the larger metros who are dedicatedly working with insurance companies to design the customized products for the need of large corporates. That is the plan to grow in the insurance business. Got it. That is all from my side. Yeah. Thank you. The next question is from the line of Swaraj Patray, an individual investor. Please go ahead. Mr. Swaraj, your line has been unmuted. Please go ahead with your question. Mr. Swaraj, your line has been unmuted. Hello. Am I audible, sir? Yes, you are. Yeah. We can hear you. Sir, I wanted to ask about the advisory services business. Currently, our main focus is on the broking business. Are you planning to increase the share of our service in advisory services business, are you going to increase the percentage revenue from this business? Also about the NBFC business, are you going to increase the book? If I have understood correctly, Swaraj Patray, you are asking about the contribution of each business vertical. Is that right? Yes. I just wanted to ask which part of the business you will be focusing more on. Okay. So Swaraj Patray, we are equally focusing on all business verticals. There is no that we are focused on any specific business vertical or any specific business is not of focus to us. However, at the same time, as the largest contribution to the total revenues comes from broking and distribution, we expect this to continue for the medium term. However, at the same time, we expect that insurance distribution, as it has been growing rapidly over the couple of years, we see that in the foreseeable future, insurance will be a separate segment, and there will be total four segments, broking and distribution excluding insurance distribution, NBFC, and advisory. So that's how we are looking to grow at all our segments. Okay, thank you so much. And I have another question about the Sorry to interrupt. The current participant has been disconnected. We'll move on to the next question. It's from the line of Heena Parekh from Finvest First Advisors. Please go ahead. Hello. Hi, thank you for the opportunity, sir. I just had a couple of questions. I will go with the first one. What are the next steps following the in-principle approval from the SEBI to launch mutual fund, and when do we expect to begin the operation? Also, what kind of products will you initially focus on? Okay. As we had received the in-principle approval, I think in the month of December, we have submitted the application for the final approval. Usually, it takes six months time for the SEBI to give the final approval after the in-principle approval. As soon as we get the final approval, we will begin with the operations. To begin with, we will be coming up with the ETF, and that is going to be the first product, followed by the other products. Okay, thank you so much. On the NBFC business side, what is the geographical spread for the NBFC business, and which are the other areas that we are planning to target? Currently, our NBFC operations are spread across Rajasthan, Gujarat, MP, Delhi NCR, and some parts of Maharashtra. In Maharashtra, we are into MMR, Mumbai Metropolitan Region. These are the focused geographies where we have been operating, and these are going to remain as focused geographies in the medium term. Of course, we are expanding our NBFC operations, but the way we expand is, let's take an example, we are operating out of town A. We choose a town B, which is in the proximity of 50 kilometers from our existing branch, and then we expand to that town B. This is the way we are approaching for our branch expansion in the NBFC business. Okay, understood. One last question. Can you elaborate on our customer retention strategies considering the volatility in the market? On the customer retention part, there is a dedicated team. We work on both the models. One is physical and second is the digital, as majority of our customers use the mobile app called Choice FinX. They trade on the Choice FinX. There is a dedicated team in the digital team also, which keep on sending the notifications, messages, advantages to the customers of using the Choice FinX app. They work on retention part. Second, we have a central team which works with the branch team to ensure the customer retention. These are by way of provision of the quality services, I would say, through which we put our efforts to retain the customers. Okay, thank you so much, sir. Wishing you all the very best for the coming financial year. Thank you. Thank you. A reminder to all participants that you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to Mr. Arun Poddar for closing comments. It has been great connecting with all of you as we close another strong financial year. One filled with the progress and the promises. At Choice International, our commitment to empowering communities through responsible, impactful, and the financial solution. We are optimistic about the opportunities ahead, especially in the financial services space, and look forward to staying in touch as your time permits. Thank you for being part of this journey and wishing each of you continued success in the year ahead. Thank you. Thank you. On behalf of Choice International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.