JM Financial initiates coverage on OnEMI Technology with Buy call, sees 28% upside

The target implies an upside of about 28% from the brokerage’s reference price of Rs 301. JM Financial valued the stock at two times its estimated FY28 book value, against 1.6 times at the reference price.

Following the coverage, OnEMI Technology shares rose as much as 3.8% to an intraday high of Rs 316.90 on the National Stock Exchange (NSE).

Over the past month, OnEMI Technology shares gained 1.41%, underperforming the benchmark’s 5.34% rise. The stock recorded a traded value of Rs 10.96 crore, while its free-float market capitalisation stood at Rs 1,627.82 crore. OnEMI is a digital-first non-banking financial company catering primarily to mass-market borrowers. It offers personal loans and loans against property through the Kissht mobile application.

JM Financial expects the company’s AUM to grow at a compound annual rate of 44% between FY26 and FY28, increasing from around Rs 7,100 crore to Rs 14,700 crore. Profit after tax is projected to grow at a CAGR of 49% over the same period, rising from Rs 281.5 crore in FY26 to Rs 445.8 crore in FY27 and Rs 629.1 crore in FY28.

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The brokerage expects average return on assets and return on equity to remain at around 5.1% and 21.8%, respectively, during FY27 and FY28, even as the company lowers lending rates to attract better-quality borrowers.
JM Financial said this repricing would be offset by operating leverage, lower borrowing costs and an improvement in credit costs. Operating expenses as a percentage of average AUM are estimated to decline to 15.2% by FY28 from around 19.6% in FY26, while credit cost is projected to fall to 6.2% from 8.2%.The company’s AUM stood at Rs 8,000 crore at the end of the first quarter of FY27, representing growth of 61% year-on-year and 13% sequentially. This was ahead of management’s guidance for AUM growth of more than 40% in FY27.

The brokerage also highlighted an improvement in the quality of new borrowers. About 95.5% of borrowers added during FY26 had credit scores above 700, while the fixed-obligation-to-income ratio for new customers declined to 30.2% from 34.4% in FY25.

On the funding side, OnEMI’s average cost of borrowings declined to 14.45% in the first quarter of FY27 from 15.68% a year earlier. JM Financial expects the borrowing cost to decline further to 12.8% by FY28.

LAP assets rose nearly fivefold year-on-year to Rs 617 crore in the June quarter, increasing their share of total AUM to 7.7% from 2.5%. More than 40% of LAP customers come from the existing personal-loan customer base, reducing acquisition costs.

The secured-lending business operates through 101 branches and is expected to break even around the third quarter of FY27. JM Financial expects its share of AUM to increase to 11% by FY28, helping reduce the portfolio’s credit risk and improve capital efficiency.

The brokerage expects gross non-performing assets to moderate from 2.12% in FY26 to 2.02% in FY28. OnEMI’s strong post-IPO capital position, with a capital adequacy ratio above 40% in the June quarter, also provides headroom for further loan-book expansion.

Disclosure: This article has been written by [Somanjali Das], who is not a SEBI-registered Research Analyst or an investment advisor. [Somanjali Das] does not hold any financial interest in [OnEMI Technology] as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.

The Research Analyst is [Shubham Karvande]. The RA is registered with SEBI under registration number [INH000000610]. The RA does not hold any financial interest in the [OnEMI Technology Solutions Ltd (Kissht)].