KISSHT Q1 FY27 earnings call

OnEMI Technology Solutions Limited (Kissht) reported robust financial results for Q1 FY27, with Assets Under Management (AUM) reaching INR 8,001 crores, marking a significant 61% year-on-year and 13% quarter-on-quarter growth. Profit After Tax (PAT) also saw substantial growth, increasing by 59% year-on-year and 16% quarter-on-quarter to INR 95 crores. The company maintained a healthy Return on Average AUM (ROA) of 5.05% and Return on Average Equity (ROE) of 21.20%, reflecting strong overall profitability.

The company's commitment to diligent risk management was evident in the improvement of its credit cost, which decreased to 6.80% of average AUM in Q1 FY27, down from 8.85% in Q1 FY26 and 7.02% in Q4 FY26. Gross NPA stood at 2.25% and Net NPA at 0.36%, with a strong collection efficiency of 96.82%. Stage 2 assets improved to 3.15% from 3.9% year-on-year, and provisioning coverage remained conservative with 84.1% for Stage-3 ECL and 80.4% for Stage-2, underscoring robust asset quality.

Kissht is deliberately focusing on acquiring higher-quality customers, who are priced lower due to reduced risk. This strategy, coupled with a rising share of off-book lending (now 53.6% of AUM, up from 49.7%), has led to a 249 basis point reduction in total income as a share of average AUM. Management emphasized that this approach ensures sustained profitability and contributes to overall value creation by mitigating risk and leveraging operational efficiencies.

The NBFC subsidiary's capital adequacy ratio significantly improved to 40.2% from 25.3% last quarter, supported by the IPO completed in May 2026 and retained earnings. Net worth grew to INR 2,245 crores, nearly four times its March 2023 level. The company's funding remains balanced, supported by over 45 lending partners, with incremental debt being raised at 150 basis points lower than the FY26 average, indicating improving access to capital at better rates.

The Loan Against Property (LAP) business, launched two years ago, now accounts for INR 617 crores (7.7% of total AUM) across 101 branches and is expected to achieve breakeven around Q3 FY27, targeting an ROE of 20%+. The company is also exploring new product categories like gold loans, business loans, education loans, and has secured AMFI registration for mutual fund distribution, aiming to leverage its large customer base for fee income and diversify its revenue streams.

Kissht highlighted its technology-first approach, with an underwriting stack reading over 7,200 signals and AI/ML models achieving an Area Under the Curve (AUC) of 74% (up from 66% in 2023). AI-assisted collections have improved voice agent recovery to over 80% efficiency (from 70%), and a multi-agent fraud system runs over 50 checks. This technological backbone underpins their ability to scale while maintaining stringent risk control and operational efficiency.

Management discussed proactive risk adjustments, including pausing lending in 450 pin codes based on early warning systems and subsequently reopening 180 as signals turned positive. They noted industry-wide stress in small-ticket loans and segments with multiple lenders, but asserted their own book's superior performance due to tightened underwriting for specific salaried profiles (lacking EPFO credit) and self-employed businesses showing credit volatility, demonstrating a cautious yet adaptive strategy.

The company anticipates a minimum 100 basis point reduction in the cost of funds over the next three quarters, with a 200-300 basis point reduction over a three-year view. Operating leverage is also expected to contribute 4-5% benefit, and overall benefits from risk reduction and cost efficiencies are projected to be 8-9% over three years, enabling the company to maintain its 5% ROA target despite revenue margin adjustments.