In conversation with Arun Poddar CEO of Choice International Ltd

Our focus lies in simplifying user journeys and expanding investment options tailored to the specific client segments we serve, articulates Arun Poddar CEO of Choice International Ltd

In Q1FY24, the total revenue of the company surged by 77 per cent on YOY basis while the net profit zoomed by more than 170 per cent from the corresponding quarter last year. What were the contributing factors to the company’s stellar results? 

Firstly, the growth in the revenue is attributed to the robust business performance of both Broking and Distribution as well as Advisory business segments. In both businesses, we are leveraging the technology to automate various operations and processes and at the same time improving the client experiences which has led to the growth in Revenue as well as contributed to the reduction in corresponding expenses thereby increasing PAT.

What is your outlook on Assets Under Management (AUM) for the stock broking segment by the end of FY24?

Based on our consistent historical growth rate, with a compound annual growth rate (CAGR) exceeding 46 per cent in the past four years, we anticipate our assets under management (AUM) to continue thriving. Our projections indicate a growth range of 25-30 per cent for the upcoming year. This optimistic outlook stems from our robust efforts in expanding our branch network, attracting a larger customer base, and actively pursuing untapped markets. The expansion into new geographical areas serves as a solid foundation for our positive growth forecasts.

Could you provide details on your current revenue distribution across segments and your anticipated changes in the mix over the next 2-3 years?

In FY23, Broking and Distribution segment contributed 63% to our revenue, while Advisory Services and NBFC segments contributed 25 per cent and 12 per cent, respectively. In the next two to three years, we anticipate that the Broking and Distribution segment 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 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

How many active clients are currently engaged with your services, and what strategies do you have in place to increase this number in the future?

We had around 207K active clients as of June-2023 which we are expecting to increase over the remaining part of the year. This will be increased by our constant efforts of user engagement, using technology to help them make informed investment decisions and increased financial awareness campaigns. This number is also set to grow as the economy stabilizes and the stock market will experience increased market participation.

What are your expectations and outlook for the Indian NBFC sector in FY24?

NBFC sector as a whole has grown significantly post-pandemic. However, it has still not achieved the pre-pandemic levels. Driven by technologies and close participation by the regulator in regulating business practices, the sector is all set to take a leap in the near future. As we all know that there are still huge credit gaps in the MSME financing sector which are largely due to non-availability of the documented income proofs. We have developed a proprietary business rule engine which consumes alternate data available as digital footprints from various channels and generates an internal credit score of the customer. This system can also forecast the cash flows and revenues along with the gross profit margins of the customer. Basis this, we are financing the right customers at the right time thereby bridging the gap in the MSME financing.

Can you elucidate on the company’s expansion plans for FY24?

As part of our expansion strategy, we are actively increasing our presence in new locations, aiming to establish 125 branches by the end of the fiscal year 2024. This significant growth in the branch network, compared to our current count of 104 branches as of Q1 FY24, will contribute to higher revenue and improved profitability. We are particularly concentrating on expanding into Tier-2 to Tier-6 cities, aligning with our commitment to financial inclusion and extending access to financial services to a broader population.

Simultaneously, we are dedicated to enhancing user engagement and streamlining user experiences. Our focus lies in simplifying user journeys and expanding investment options tailored to the specific client segments we serve. By executing these initiatives, we are confident in achieving our targets of 30-40 per cent revenue and profitability growth in FY24.