OnEMI Tech IPO far from fully booked; brokerage flags key risks

The IPO of OnEMI Technology Solutions continues to struggle for traction, with subscription levels remaining well below full coverage on Day 2 and grey market signals pointing to negligible listing gains, even as brokerages caution investors about structural risks in the business.

The issue was subscribed just 0.63 times by the end of the second day of bidding. While institutional interest offered some support, with the qualified institutional buyers (QIB) portion subscribed 1.51 times, demand from other segments remained weak. Retail investors subscribed only 0.17 times, while the non-institutional investor (NII) category saw a subscription of 0.53 times, reflecting muted broader participation.

Grey market trends mirror the lack of enthusiasm. The IPO’s GMP stands at around Rs 1.5, indicating an estimated listing price of Rs 172.5, a marginal premium of just 0.88% over the upper price band of Rs 171. This suggests limited listing upside and cautious sentiment among investors.

WHY BROKERAGES ARE FLAGGING RISKS

Despite acknowledging growth potential, analysts have underlined multiple risks that make the IPO suitable only for investors with a higher risk appetite.

According to a note by Geojit Investments Limited, the company’s business model remains exposed to credit risks due to its heavy reliance on unsecured lending. “Unsecured loans form a majority of AUM (94.2% as of December 31, 2025), making the business sensitive to demand fluctuations,” the brokerage said.

Another concern highlighted is the scale of contingent liabilities. “As of December 31, 2025, contingent liabilities totalled Rs 1,793.49 crore, which may impact financial performance if realised,” the note added.

These risks are particularly relevant given the company’s focus on borrowers with limited credit history, a segment that tends to be more vulnerable during economic stress.

DEPENDENCE ON PARTNERS ADDS TO CONCERNS

The brokerage note also points to the company’s operating structure, where key lending activities such as disbursement, KYC and collections are handled by its NBFC partner, Si Creva and other financial institutions. This dependence can create execution and operational risks if partnerships face disruptions.

Additionally, nearly half of the company’s assets under management (AUM) are off-book and held by third-party institutions, adding another layer of complexity to the business model.

VALUATION MAY NOT FULLY OFFSET RISKS

At the upper price band of Rs 171, the IPO is valued at around 1.4 times price-to-book (post-issue), which brokerages say is broadly in line with peers but does not significantly discount the inherent risks.

“At the upper price band of Rs 171, OnEMI is valued at ~1.4x P/B (post-issue), which appears fairly priced relative to peers while factoring in inherent risks We therefore recommend a ‘Subscribe’ rating for high-risk investors for a short to medium term,” Geojit Investments Limited said.

LOW DEMAND, LOW GMP SIGNAL CAUTION

The combination of weak subscription levels and subdued grey market premium indicates that investors are approaching the issue cautiously.

While the company operates in a fast-growing digital lending space and has reported strong growth in assets and customer base, the risks around unsecured lending, reliance on partners, and earnings visibility appear to be weighing on sentiment.

With the IPO yet to be fully subscribed and retail participation remaining particularly weak, investor response over the final days will be crucial in determining whether demand picks up or the cautious trend persists.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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