Aye Finance IPO is drawing strong attention from investors looking for exposure to India’s fast-growing MSME (Micro, Small and Medium Enterprises) lending space. As the formal credit ecosystem expands beyond traditional banks, non-banking financial companies (NBFCs) focused on small-ticket business loans are becoming an important part of the country’s financial inclusion story. Aye Finance Limited, with its pan-India presence and deep focus on micro-scale enterprises, is now entering the public markets through a ₹1,010 crore book-built IPO. In this detailed Aye Finance IPO review, we cover issue details, financial performance, valuation, GMP, strengths, risks, and whether this IPO is good or bad for long-term investors. If you are planning to subscribe or wondering “should you invest or avoid?”, this deep-dive analysis will help you make an informed decision.
About Aye Finance Limited
Incorporated in 1993, Aye Finance Limited is a registered NBFC offering secured and unsecured loans primarily to micro and small enterprises across India. The company focuses on providing working capital and business expansion loans to enterprises in manufacturing, trading, services, and allied agriculture sectors.
Over the years, Aye Finance has built a strong distribution and underwriting model targeted at micro-scale MSMEs, a segment that is traditionally underserved by large banks due to limited formal credit histories and higher perceived risk.
Key Highlights of the Business
- Serving over 5.86 lakh active customers
- Operations spread across 18 states and 3 Union Territories
- Strong presence in Tier-2, Tier-3, and semi-urban markets
- Technology-backed credit assessment and collections model
Product Portfolio
- Mortgage Loans
- ‘Saral’ Property Loans
- Secured Hypothecation Loans
- Unsecured Hypothecation Loans
This diversified product mix allows the company to balance growth and risk across secured and unsecured lending segments.
Competitive Strengths
Aye Finance has positioned itself as a niche lender in the small-ticket MSME loan segment. Some of its key competitive advantages include:
1. Focus on Large and Underserved TAM
The company operates in a massive total addressable market (TAM) of micro and small enterprises that remain largely underserved by traditional banks. This gives Aye Finance a long runway for sustainable growth, especially as formalization of MSMEs continues in India.
2. Strong Sourcing Network
With a wide branch network and on-ground sales teams, Aye Finance has built a robust sourcing engine that allows it to acquire customers efficiently in semi-urban and rural regions.
3. Effective Underwriting Model
The company uses a combination of field-level assessment, cash-flow analysis, and technology-driven credit scoring to evaluate borrowers who may not have formal financial statements or credit history.
4. Multi-Tier Collection System
A structured collection framework helps the company manage delinquencies, which is critical in the MSME lending business where economic cycles can quickly impact repayment behavior.
5. Access to Diversified Funding
Aye Finance enjoys access to a diversified lender base, including banks, financial institutions, and development finance entities, which helps in managing borrowing costs and liquidity.
Aye Finance IPO Issue Details
Here are the key issue details investors should know:
- IPO Type: Book Building Issue
- IPO Size: ₹1,010 crore
- Fresh Issue: ₹710 crore
- Offer for Sale (OFS): ₹300 crore
- Face Value: ₹2 per share
- Price Band: ₹122 to ₹129 per share
- Lot Size: 116 shares
- Listing At: BSE, NSE
Important Dates
- IPO Opens: Monday, Feb 9, 2026
- IPO Closes: Wednesday, Feb 11, 2026
- Allotment Date: Thursday, Feb 12, 2026 (Tentative)
- Listing Date: Monday, Feb 16, 2026 (Tentative)
Investment Amount (At Upper Price Band)
- Retail (Min): ₹14,964 (1 lot / 116 shares)
- S-HNI (Min): ₹2,09,496
- B-HNI (Min): ₹10,02,588
Lead Managers & Registrar
- Lead Manager: Axis Capital Ltd.
- Registrar: KFin Technologies Ltd.
Financial Performance Analysis
Aye Finance has shown strong growth in its asset base and income over the last few years, reflecting the expansion of its lending operations.
Restated Financials (₹ Crore)
| Period | Assets | Total Income | PAT | Net Worth |
|---|---|---|---|---|
| Sep 30, 2025 | 7,116.01 | 863.02 | 64.60 | 1,727.37 |
| Mar 31, 2025 | 6,338.63 | 1,504.99 | 175.25 | 1,658.87 |
| Mar 31, 2024 | 4,869.59 | 1,071.75 | 171.68 | 1,232.65 |
| Mar 31, 2023 | 3,126.00 | 643.34 | 39.87 | 754.49 |
Key Observations
- Assets Under Management (AUM) have more than doubled over the last two years, showing strong loan book growth.
- Profitability has improved significantly compared to FY23, though margins remain sensitive to funding costs and credit losses.
- Net Worth Growth indicates consistent capital infusion and retained earnings, strengthening the balance sheet.
Key Ratios
- ROE (FY25): 12.12%
- Debt/Equity: 2.73
- Price to Book (Post IPO): ~1.45x
These ratios suggest a moderately leveraged balance sheet typical for NBFCs, with room for improvement in return metrics.
Objects of the IPO
The company plans to utilize the net proceeds from the fresh issue for:
- Augmenting its capital base to support future business growth
- Strengthening the balance sheet
- Improving capital adequacy ratios
- General corporate purposes
This indicates that the IPO is largely growth-oriented rather than purely an exit for existing investors.
P/E Ratio and Peer Comparison (As per RHP)
As per the Red Herring Prospectus (RHP), Aye Finance has provided a peer set comprising listed NBFCs and small-business focused lenders operating in similar or adjacent segments of the MSME and retail lending ecosystem.
Valuation Snapshot (Based on RHP Disclosures)
At the upper price band of ₹129 per share:
- Pre-IPO EPS: ₹9.14
- Post-IPO EPS: ₹5.24
- Post-IPO P/E: ~24.6x
IPO Price Valuation
| Metric | Observation |
|---|---|
| Highest | SBFC Finance Limited trading at 27.3x |
| Lowest | Five-Star Business Finance Limited trading at 12.07x |
| Industry Average Range | 19.7x |
| Aye Finance Positioning | At ~24.6x post-IPO P/E, Aye Finance IPO Price is overpriced compared to industry valuation, reflecting growth expectations and niche MSME focus. |
Reasons to Invest in Aye Finance IPO
1. Strong Structural Growth in MSME Lending
India’s MSME sector continues to benefit from formalization, GST adoption, digital payments, and government-backed credit schemes. As a focused MSME lender, Aye Finance stands to gain from increasing demand for small-ticket business loans.
2. Expanding Geographic Footprint
The company’s presence across multiple states reduces regional concentration risk and allows it to tap growth opportunities in underpenetrated markets.
3. Technology-Led Credit Model
Use of analytics, digital onboarding, and structured field assessments improves underwriting efficiency and scalability, which is critical for long-term profitability.
4. Capital Infusion for Growth
Fresh issue proceeds will strengthen capital adequacy, enabling faster loan book expansion without overleveraging the balance sheet.
5. Backing by Marquee Investors
The presence of well-known institutional investors adds credibility and governance strength to the company’s long-term strategy.
Risk Factors to Consider
1. Asset Quality Risk
MSME borrowers are highly sensitive to economic slowdowns. Any downturn in local business cycles can increase NPAs and impact profitability.
2. High Dependence on Borrowed Funds
With a debt-heavy balance sheet, rising interest rates or tightening liquidity conditions can put pressure on net interest margins.
3. Regulatory Risk
As an NBFC, Aye Finance is subject to RBI regulations. Any change in capital adequacy norms or lending guidelines can impact growth and profitability.
4. Valuation Risk
At a P/E above industry average, any slowdown in growth or deterioration in asset quality may lead to de-rating in the stock price post-listing.
5. Competition from Banks and Fintechs
Large banks and digital lending platforms are increasingly targeting MSMEs, which could compress margins and increase customer acquisition costs.
Grey Market Premium (GMP)
As of the Latest Aye Finance IPO GMP is minimal at ₹ 5 – 12 and is yet to show consistent trends in the grey market. Investors should track GMP closer to the issue opening date to gauge short-term listing sentiment.
Note: GMP is an unofficial indicator and should not be the sole basis for investment decisions.
How to Buy / Apply for Aye Finance IPO
You can apply for the IPO through:
- Online trading apps (Zerodha, Upstox, Groww, Angel One)
- Net banking ASBA facility
- UPI-based IPO applications
Steps
- Log in to your broker or bank platform
- Select Aye Finance IPO
- Enter lot size and bid price
- Approve UPI or ASBA mandate
- Track allotment status after closure
Conclusion – Should You Invest or Avoid?
Aye Finance IPO offers exposure to India’s growing MSME credit segment, supported by a scalable business model, improving financials, and strong institutional backing. The company’s focus on underserved markets and technology-led underwriting provides long-term growth visibility.
However, investors should also be mindful of risks related to asset quality, regulatory changes, and valuation premium over industry averages.
Our View
- Long-term Investors: May consider subscribing with a 3–5 year investment horizon, provided they are comfortable with NBFC sector risks.
- Short-term / Listing Gains Seekers: Should track GMP and market sentiment closer to listing.
Overall, Aye Finance IPO appears moderately positive for long-term investors but not without sector-specific risks.
FAQs – Aye Finance IPO
1. What is the IPO price band for Aye Finance?
The price band is ₹122 to ₹129 per share.
2. What is the minimum investment for retail investors?
Retail investors need to invest a minimum of ₹14,964 for one lot of 116 shares at the upper price band.
3. When will Aye Finance IPO list?
The tentative listing date is February 16, 2026.
4. Is Aye Finance a profitable company?
Yes, the company has reported consistent profits in recent financial years, with improving net worth and asset base.
5. What is the main risk in this IPO?
The biggest risk is potential deterioration in MSME asset quality during economic slowdowns.
6. Is GMP a reliable indicator for investment?
No, GMP is unofficial and should only be used as a sentiment indicator, not a decision-making tool.
Disclaimer
This IPO review is for educational and informational purposes only and does not constitute investment advice. Investing in equity shares involves risks, including the potential loss of capital. Readers are advised to read the Red Herring Prospectus (RHP) carefully and consult with a SEBI-registered financial advisor before making any investment decision.
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