It IPO'd After a Year of Falling Profit — Then Its Stock Nearly Doubled

Most companies try to time their IPO for a year when the numbers look their best. This one didn’t have that luxury. In the year before it went public, profit actually fell by close to 20%. It listed anyway, priced modestly at a discount to what a straightforward earnings multiple might suggest, popped on debut, and has since gone on to nearly double from its issue price.

That’s an unusual arc: a weak year, a cautious IPO price, and a market that decided to look past both. The real question is whether the market is looking at the same numbers you would, or a different, more recent story entirely.

This is a digital-first lender, serving customers who are largely new to formal credit — the mass-market, underserved segment banks have historically found expensive to reach. It operates through two consumer-facing apps, one built around checkout finance at the point of purchase, another offering personal loans and loans against property, both funneling into a single RBI-regulated NBFC lending subsidiary.

The pitch is genuinely tech-first: a proprietary, in-house machine learning underwriting engine built to assess borrowers with little to no formal credit history, distributed through a mix of digital marketing and merchant partnerships. Scale here is real — more than 50 million registered users and close to 2.9 million active borrowers, with assets under management that grew at a reported compound annual rate of close to 80% between FY23 and FY25.

Here’s where the story gets more interesting than the growth headline alone suggests. Full-year revenue fell from around ₹1,700 crore in FY24 to roughly ₹1,340–1,350 crore in FY25, and profit after tax declined from about ₹197 crore to around ₹160 crore over the same period — a genuine step back, not a rounding error.

But look at the more recent quarters, and the picture shifts. Quarterly profit has been recovering sharply — the quarter ended March 2026 posted profit after tax of roughly ₹82 crore, up over 50% year-on-year. That’s the tension at the heart of this stock: a full annual report that shows contraction, sitting right next to a run of recent quarters that look like a genuine turnaround.

Asset quality metrics look healthy on the surface — gross NPA near 2.9% and net NPA around 0.38% — reasonable figures for a lender focused on newer-to-credit borrowers, though it’s worth remembering this book is still young, having scaled rapidly in just the last two to three years, and hasn’t yet been tested through a full credit cycle.

Following its IPO, the company routed a large chunk of the fresh capital raised, roughly ₹637 crore, directly into its lending subsidiary via a rights issue priced at a steep premium, specifically to support future loan book growth. That’s a straightforward, sensible use of IPO proceeds for a lending business: more capital directly funding more lending capacity.

• A genuinely short public track record. The company listed only months ago; there isn’t much history yet of how it performs across a full market or credit cycle as a public company

• FY25’s profit decline needs a fuller explanation and a confirmed recovery, not just a couple of strong quarters, before it should be read as fully resolved

• Untested credit quality at scale. A loan book built rapidly around new-to-credit borrowers is inherently harder to underwrite reliably than one built on borrowers with an established credit history, and current asset quality numbers haven’t yet been through a genuine stress period

• Competitive intensity from far larger, better-capitalized NBFC and bank-backed lenders, several of which are actively expanding into the same underserved segment

• Regulatory sensitivity. Digital lending in India has faced repeated regulatory scrutiny in recent years around disclosure, recovery practices, and data use — a sector where rules can tighten with limited notice

At a market capitalization of roughly ₹5,700–5,800 crore, the stock trades at a price-to-earnings ratio in the high 30s to around 40, against peers like larger diversified NBFCs and consumer lenders that are substantially bigger in scale. Data on price-to-book here has been genuinely inconsistent across providers, to the point where it’s not reliably usable without a direct check against the company’s own filings, so it’s better set aside than quoted with false precision.

The core valuation question is simple to state and harder to answer: is the market correctly pricing in a genuine turnaround from FY25’s dip, backed by real, sustained quarterly improvement, or is it extrapolating two or three good quarters onto a business that only recently proved it could also have a bad year.

So — which company is it?

OnEMI Technology Solutions Ltd (Kissht)