OnEMI Technology Solutions IPO Sees 24% Subscription on First Day: Key Details and Investment Considerations

OnEMI Technology Solutions IPO Sees 24% Subscription on Opening Day

OnEMI Technology Solutions Ltd, the parent company of digital lending platform Kissht, witnessed a 24% subscription on its opening day of bidding for its initial public offering (IPO) on Thursday, 30 April. According to data from the National Stock Exchange (NSE), the IPO received bids for 9,433,584 shares, while 39,762,250 shares were available for purchase.

The Qualified Institutional Buyers (QIBs) segment saw a higher subscription rate of 66%, indicating strong interest from institutional investors. In contrast, the non-institutional investors' portion achieved a relatively lower subscription rate of 10%, while the Retail Individual Investors (RIIs) category drew 6% of bids.

OnEMI Technology Solutions Ltd had previously announced that it had raised ₹278 crore from anchor investors on Wednesday. The IPO will conclude on 5 May, with the company's valuation positioned at approximately ₹2,900 crore at the higher end of the price band. The IPO price band has been set between ₹162-171 per share, with a minimum lot size of 87 equity shares, requiring a minimum investment of ₹14,877 for retail investors at the upper price band.

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The allocation of the offering is split between qualified institutional buyers (QIBs) at 50%, retail investors at 35%, and non-institutional investors (NIIs) at 15%.

Grey Market Premium Increases, Estimated Listing Price Indicated at ₹175.5

The grey market premium (GMP) for OnEMI Technology Solutions IPO has increased to +4.5, with the estimated listing price of the share indicated at ₹175.5 apiece, which is 2.63% higher than the IPO price of ₹171. This represents an upward trend in grey-market activity over the past six sessions, with experts anticipating a solid listing.

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IPO Review: Anand Rathi Research and Swastika Investmart Weigh In

Anand Rathi Research has assigned a "Subscribe – Long Term" recommendation to the IPO, stating that the company is valued at 1.4x FY25 Price-to-Book (P/B) at the upper price band, implying a post-issue market capitalization of ₹28,810 million. The firm highlighted that approximately 94% of the company's loan book is unsecured, indicating a relatively higher-risk lending profile.

However, Anand Rathi Research noted that the company has effectively scaled its digital loan distribution and is well-positioned to capitalize on future growth opportunities, backed by a strong user base of 53 million and substantial headroom in India's underpenetrated credit market.

Swastika Investmart also weighed in on the IPO, stating that the stock is presently trading at an appealing valuation of 10.8x Price-to-Earnings (P/E) and 0.91x P/B, indicating a significant discount in comparison to competitors like Bajaj Finance. However, the brokerage pointed out important risks, including approximately 94% of the loan portfolio being unsecured, rendering the business highly susceptible to economic downturns or stricter regulatory actions from the RBI.

IPO Details

The initial public offering includes a new equity share issue totaling ₹850 crore, along with an offer-for-sale (OFS) of 44,39,788 equity shares valued at ₹76 crore at the upper price range by current shareholders. This brings the overall size of the issue to ₹926 crore. Funds generated from the new issue will be utilized to enhance the capital base of its subsidiary Si Creva to support upcoming funding needs, along with general corporate purposes.

The book-running lead managers for the issue are JM Financial, HSBC Securities and Capital Markets, Nuvama Wealth Management, SBI Capital Markets, and Centrum Broking, while the registrar for the issue is KFin Technologies Ltd.