The IPO of OnEMI Technology Solutions, valued at Rs 926 crore, has entered its third day with moderate demand. As of the end of Day 2, the overall subscription stands at 60%, primarily driven by institutional investors, while retail participation remains limited.
The grey market premium (GMP) has dipped below 1%, indicating a cautious sentiment among investors regarding the offering.
Subscription Details
By Day 2's close, the IPO was subscribed to 60% of the total 3.97 crore shares available. Retail investors contributed only 16% of their allocated 1.99 crore shares. In contrast, non-institutional investors covered 50% of their 85.36 lakh share quota, while qualified institutional buyers (QIBs) showed stronger interest, bidding 1.45 times their 1.13 crore shares.
IPO Pricing and Schedule
The shares are priced between Rs 162 and Rs 171, aiming to raise Rs 926 crore, which includes a fresh issue of Rs 850 crore and an offer for sale (OFS) of Rs 76 crore. The subscription period will remain open until May 5, with a listing anticipated in early May.
Market Expectations
The grey market currently values the IPO at around Rs 1.5 per share over the upper price band, suggesting a tentative listing price of approximately Rs 172, indicating limited upside potential.
Company Overview
OnEMI Technology Solutions operates the digital lending platform Kissht, offering personal and business loans through an online process. The platform has grown significantly, reaching over 6.3 crore users, and utilizes a data-driven credit evaluation system to enhance access to credit.
Financial Performance
The company's financials reflect mixed results, with a revenue decline to approximately Rs 1,352 crore in FY25 from Rs 1,700 crore the previous year. However, net profit increased to Rs 160.6 crore, and EBITDA margins expanded to nearly 30% from below 10% two years prior.
Use of Proceeds
IPO proceeds will primarily support the capital base of its NBFC subsidiary, Si Creva, with Rs 637.50 crore allocated for this purpose, while the remaining funds will be used for general corporate needs.
Valuation Insights
At the upper price band, OnEMI Technology Solutions is valued at approximately 10–12 times its earnings and around 0.9 times its book value, which is lower compared to established competitors like Bajaj Finance and SBI Cards.
Risks to Consider
The company faces significant risks due to its reliance on unsecured lending, which constitutes over 90% of its loan portfolio. This increases exposure to credit risk, particularly during economic downturns. Additionally, the company's growth is contingent on customer acquisition and retention, while regulatory changes in digital lending could impact operations.
Investment Outlook
Brokerages have issued cautious ratings on the IPO. While some acknowledge the scalable nature of the AI-driven platform and solid asset quality, concerns remain about the sustainability of growth and associated credit risks. Analysts suggest that investors approach with caution, weighing the potential against the risks involved.
