Choice International's margin slips sequentially as costs outpace revenue
Year-on-year margins improved, but higher interest and tax rates limited profit growth; management highlighted expansion across mutual funds, digital distribution and investment banking.
Filed 02 Nov 2026, 21:41 IST · after market close · Choice International Ltd (CHOICEIN)
Key takeaways
- Year-on-year revenue growth of +35.87% outpaced expense growth of +34.18%, lifting operating margin by 0.83 percentage points.
- Sequentially, expenses grew +21.17% against revenue growth of +20.36%, narrowing operating margin by 0.45 percentage points.
- Operating margin at 33.38% was 20.1 percentage points below the 53.48% median of 70 Financial Services peers that had reported.
Price around the results
Growth remained strong, but sequential momentum softened
In consolidated Q2FY27 results, revenue grew +35.87% year-on-year and +20.36% sequentially, while net profit rose +23.04% and +14.62%, respectively. The slower profit growth reflects interest expense rising +48.74% year-on-year and +10.69% sequentially. Other income contributed 6.58% of pre-tax profit, so it was not the main source of earnings.
Costs drove the quarterly margin decline
Sequentially, expenses grew +21.17%, faster than revenue at +20.36%, reducing operating margin by 0.45 percentage points. Year-on-year, revenue grew faster than expenses, producing a 0.83 percentage-point margin improvement despite higher interest and depreciation costs. The tax rate also rose by 1.78 percentage points sequentially and 1.83 percentage points year-on-year, limiting the conversion of pre-tax profit into net profit.
Margin has fallen for two quarters from the FY26 peak
Operating margin declined from 37.66% in Q4FY26 to 33.83% in Q1FY27 and 33.38% in Q2FY27, marking two consecutive quarterly declines. The company's margin was 20.1 percentage points below the 53.48% median for 70 Financial Services peers that had reported the quarter. Across the eight previous result reactions, the stock rose three times and fell five times, with a median absolute move of 2.09%; the current results were filed after market close, so no market reaction was available yet.
Management is expanding distribution and digital offerings
Management said Mutual Fund QAAUM is projected to grow by approximately 16% to 18% and that the industry's projected growth is also approximately 16% to 18% CAGR from Fiscal 2026 to Fiscal 2030. The company said it is expanding its PAN-India reach and client demographic, while Trader Mode has been launched in its app. Management also said the India Post Payments Bank partnership completed a product soft launch on 1 September, and that the investment banking pipeline remains strong.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹373 cr | ₹310 cr | +20.36% | +35.87% |
| Other income | ₹6 cr | ₹9 cr | -33.23% | -36.19% |
| Expenses | ₹248 cr | ₹205 cr | +21.17% | +34.18% |
| Operating profit | ₹124 cr | ₹105 cr | +18.77% | +39.37% |
| Operating margin (%) | 33.38% | 33.83% | — | — |
| Interest | ₹31 cr | ₹28 cr | +10.69% | +48.74% |
| Depreciation | ₹6 cr | ₹6 cr | -4.19% | +55.81% |
| Profit before tax | ₹94 cr | ₹80 cr | +17.39% | +26.09% |
| Tax | ₹24 cr | ₹19 cr | +26.04% | +35.65% |
| Net profit | ₹69 cr | ₹61 cr | +14.62% | +23.04% |
| EPS (₹) | ₹3.12 | ₹2.72 | +14.71% | +13.45% |
Operating margin of 33.38% compares with a Financial Services sector median of 53.48% across 70 peers that have reported Q2FY27.
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 India Post Payments Bank partnership completed a product soft launch on 1 September.
Guidance & outlook
- Mutual Fund QAAUM is projected to grow by approximately 16% to 18%.
- The mutual fund industry is projected to grow at approximately 16% to 18% CAGR from Fiscal 2026 to Fiscal 2030.
- The investment banking industry pipeline remains strong.
Expansion
- The company is expanding its PAN-India reach and client demographic.
New initiatives
- Trader Mode has been launched in the app.
- The company has entered a strategic collaboration with India Post Payments Bank to expand digital mutual fund distribution.
What to watch
- Whether operating margin holds above 33.38% after two consecutive quarterly declines.
- Whether expense growth falls below the 20.36% sequential revenue-growth rate.
- Progress against management's projected 16% to 18% Mutual Fund QAAUM growth.