In an interaction with Arun Poddar, CEO of Choice International Ltd

We believe that the Indian financial services sector is poised for significant growth in the coming years, says Arun Poddar, CEO of Choice International Ltd

Can you shed some light on your company’s Q4FY23 and FY23 results? What is your outlook for the next few quarters?  

In FY23, our company achieved significant revenue growth of 38 per cent compared to the previous year, with revenue of Rs 3,952 million. In Q4 FY23, our revenue stood at Rs 1,395 million, a growth of 49 per cent compared to the same quarter last year. Our consolidated EBITDA and PAT for FY23 were Rs 1,087 million and Rs 601 million respectively, and for Q4 FY23, the EBITDA was Rs 474 million, and PAT of Rs 303 million.

The broking industry is expected to continue its upward growth trajectory, driven by increasing investor participation in the stock markets and the rising popularity of phygital brokers. As a company, we recognize this trend and are focused on providing more tech-driven solutions to our users through the use of APIs and other advanced technologies like AI and ML.

The pandemic has accelerated the adoption of digital channels, which has benefited brokers. However, the industry may face challenges due to regulatory changes, competitive pressures, and fluctuations in the stock markets. We understand that financial services are an essential part of our customers' lives, and we aim to offer a comprehensive suite of financial products and services that cater to all their needs throughout their lifecycle.

The AUM for the Mutual Fund business witnessed a growth of 11 per cent on a YoY basis. What were the factors which contributed to the growth and what is the AUM growth the company is targeting for the next few quarters? 

Choice FinX has been able to provide clients with a seamless experience through a smooth transaction flow and a single sign-in feature, which has made all services available in one app. This has facilitated in cross-selling of products and has been particularly effective through specially curated baskets, where clients can choose products based on their risk and return preferences. Additionally, various SIP drives have been run by our sales team and branches.

The company is expecting to attract a wider range of investors and with it, we are targeting an AUM of Rs 1000 crore in the next few years. The range of investment products offered, like debt and equity funds, bonds and AIF will allow clients to choose according to their risk appetite. This should enable the company to achieve a sustainable growth rate and offer better value to its clients.

What is your segment-wise revenue mix and how do you expect it to evolve over the next 2-3 years?

In FY23, Choice FinX (our broking business) contributed 63 per cent to our revenue, while Advisory Services and NBFC verticals contributed 25 per cent and 12 per cent respectively. In the next two to three years, we anticipate that the Broking Services will generate 50 per cent of the revenue, with 60 per cent of it coming from Stock Broking and the remaining 40 per cent coming from other Broking Services, with the Insurance Distribution playing a big role. 25 per cent of the revenue will come from NBFC and Advisory services which will contribute 25 per cent to the top line. By expanding our offerings and strengthening our presence in each segment, we aim to achieve sustainable growth across our business lines.

The company announced its plans to expand its operations in North India by launching 10 new branches by H1FY23. How does the expansion fit into the company's broader growth strategy, and are there plans to expand further into other regions or segments in the future?

The company's mission is to promote financial inclusion by providing accessible financial services to all citizens, especially the underserved population. Currently, with 94 branches spread across India, Expanding into Northern India is a key element of the company's growth strategy as it allows us to tap into a significant untapped market and extend our financial services to a new customer base and expand into new geographical regions soon. In terms of future expansion plans, the company is constantly exploring new opportunities to expand into other regions and segments. However, any expansion plans will be carefully evaluated and implemented to ensure long-term growth while continuing to provide high-quality financial services to our customers.

What is your outlook on the Indian financial services sector? 

As a leading player in the Indian financial services sector, we are optimistic about its future growth prospects. India's economy is expected to rebound strongly in the post-pandemic period, and the financial services sector is likely to play a crucial role in supporting this growth. 

With the increasing adoption of technology platforms, the sector is evolving rapidly, and we believe that companies that can leverage technology to enhance customer experience and offer innovative products and services will be well-positioned to capture growth opportunities. The sector is also witnessing regulatory changes that are aimed at enhancing transparency and consumer protection, which will help build trust and confidence among investors. Overall, we believe that the Indian financial services sector is poised for significant growth in the coming years.