Broker’s call: OnEMI Technology (Buy)

OnEMI Technology Solutions Ltd (Kissht) is a digital-first NBFC operating in India, primarily offering personal loans (PL) and loan against property (LAP) via its mobile app. As of Q1FY27, PL comprised the majority of their assets under management (92%), while LAP was steadily expanding their diversified portfolio. The analysts anticipate that Kissht is entering a significant turning point, with a strategic repositioning towards higher-quality borrowers supported by three cost-saving strategies: leveraging their existing technology, reduced funding costs due to favorable ratings, and better management of credit losses.

This shift in focus has resulted in stable revenue per average unit of AUM (RoAAUM) at around 5% while maintaining overall income as a percentage of AUM (RoE) at approximately 5.1%. LAP, which saw a remarkable 396% YoY growth to ₹620 crore, brings a more capital-efficient and lower loss-to-default model to their predominantly unsecured lending book.

Over the FY26–28E period, they anticipate AUM/PAT growth at a compound annual growth rate (CAGR) of 44/49%, with RoAAUM and RoE reaching 5.1/21.8% by the end of FY28E. The analysts initiate coverage on Kissht with a Buy rating and set a target price (TP) of ₹385, valuing the company at double its FY28E price-to-book ratio. However, they highlight several key risks: potential asset-quality deterioration in the small-ticket unsecured segment, with tenure extensions possibly deferring rather than reducing lifetime losses; over 50% of their AUM being off-book, which limits visibility into asset quality and concentrates risk within their fixed loan disbursal growth cap of 5%; and higher-than-expected yield compression from increasing competitive pressures.