Choice International lifts operating margin to 59.13% in Q1FY27
Revenue growth outpaced expenses, but the higher tax rate limited the conversion of a 216.18% rise in pre-tax profit into net profit.
Filed 10 Aug 2026, 20:44 IST · after market close · Choice International Ltd (CHOICEIN)
Key takeaways
- Standalone revenue grew 75.38% year on year, while operating margin expanded 20.96 percentage points to 59.13%.
- Net profit rose 188.46% year on year despite the tax rate increasing 6.86 percentage points to 30.22%.
- Operating margin remained 5.3 percentage points below the 64.43% median for 55 Financial Services peers that had reported.
Price around the results
Revenue momentum carried into Q1FY27
Choice International's standalone revenue grew 19.59% sequentially and 75.38% year on year, taking operating profit growth to 26.01% and 172.11%, respectively. Expenses grew more slowly than revenue in both comparisons, at 11.58% sequentially and 15.97% year on year. Other income contributed only 3.41% of pre-tax profit, so the quarter's earnings were largely operating-led.
Margin improved, but tax absorbed more of the gain
Operating margin widened 2.95 percentage points sequentially and 20.96 percentage points year on year because revenue growth exceeded expense growth. Interest expense fell 20.00% sequentially and 55.56% year on year, providing an additional lift below operating profit. The tax rate rose to 30.22%, up 5.27 percentage points sequentially and 6.86 percentage points year on year, which restrained net-profit growth relative to the 34.94% sequential and 216.18% year-on-year increases in pre-tax profit.
Margin recovery continued from the Q2FY26 trough
Operating margin has risen from -5.35% in Q2FY26 to 30.42% in Q3FY26, 56.18% in Q4FY26 and 59.13% in Q1FY27. That is a fourth consecutive quarterly improvement, although the current margin was still below the 64.43% median among 55 reported Financial Services peers. The company ranked 25th from the bottom on this comparison.
Management links expansion to broking and distribution
Management said Choice International and NH Investment & Securities had entered a partnership involving a Rs 9,000 million investment in Choice Equity Broking, with objectives including expanding the MTF book and settlement funding portfolio. The presentation said capital deployment would include working capital, capital expenditure and strategic acquisitions, while management also said the group was expanding its branch and franchisee network. In the operating businesses, management reported that 79.24% of the NBFC's focused retail portfolio comprised MSME business loans and that annualised employee productivity in insurance distribution was 13.37 in Q1FY27.
Results were filed after the close; prior reactions skewed negative
The results were filed after market close, so there was no market reaction to this quarter in the supplied record. Across the previous eight results, the stock rose after three and fell after five, with a median absolute move of 1.67%; the historical pattern therefore leaned down, but did not establish a uniform response.
Q1FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹12 cr | ₹10 cr | +19.59% | +75.38% |
| Other income | ₹0 cr | ₹0 cr | +450.00% | -51.11% |
| Expenses | ₹5 cr | ₹4 cr | +11.58% | +15.97% |
| Operating profit | ₹7 cr | ₹5 cr | +26.01% | +172.11% |
| Operating margin (%) | 59.13% | 56.18% | — | — |
| Interest | ₹0 cr | ₹0 cr | -20.00% | -55.56% |
| Depreciation | ₹0 cr | ₹0 cr | -3.03% | +6.67% |
| Profit before tax | ₹6 cr | ₹5 cr | +34.94% | +216.18% |
| Tax | ₹2 cr | ₹1 cr | +63.87% | +306.25% |
| Net profit | ₹5 cr | ₹4 cr | +25.70% | +188.46% |
| EPS (₹) | ₹0.20 | ₹0.16 | +25.00% | +150.00% |
Operating margin of 59.13% compares with a Financial Services sector median of 64.43% across 55 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- The NBFC's focused retail portfolio comprised 79.24% MSME business loans.
- Annualised employee productivity was 13.37 in Q1 FY27 for the insurance distribution business.
Expansion
- Choice International partnered with NH Investment & Securities through a f9000 million investment in Choice Equity Broking.
- The strategic objectives include expanding the MTF book and settlement funding portfolio.
- The company plans to use capital for working capital and capital expenditure.
- Strategic acquisitions are included in the capital deployment objectives.
- Choice is increasing reach through new branches and franchisee network expansion.
New initiatives
- The partnership aims to enhance Choice Equity Broking's technology capabilities.
- The partnership includes adopting global governance standards.
- Choice led end-to-end project management for the Nava Raipur Medi-City.
Problems & risks
- Net interest margin reduced by 20 basis points.
What to watch
- Whether operating margin holds above 59.13% after four consecutive quarterly improvements.
- Whether the tax rate moves below or remains above 30.22%.
- Whether the NBFC's MSME share remains near the reported 79.24% of its focused retail portfolio.