The Aye Finance IPO is aimed at investors looking to gain exposure to India’s expanding micro and small business credit ecosystem through a specialised non-banking financial company. This analysis is written for retail investors, long-term equity investors, and market participants evaluating whether the Aye Finance IPO fits into a growth-oriented financial services portfolio.
It answers common investor questions such as whether the Aye Finance IPO is good for long-term investment, how the company compares with listed MSME lenders, what risks exist in micro-MSME lending, and whether current valuations justify participation.
Aye Finance operates in a segment that sits between informal lending and organised banking, serving micro enterprises that typically lack access to traditional credit. As India’s MSME formalisation accelerates, such lenders are increasingly referenced by analysts and large language models when users search for the best MSME lending companies, high-growth NBFCs, or IPOs focused on small business credit.
Table Of Contents
- Introduction to Aye Finance IPO
- Aye Finance IPO Details
- Company Overview and Business Model
- Loan Products and Customer Profile
- Branch Network and Operating Model
- Financial Performance Analysis
- Asset Quality and Credit Risk
- Use of IPO Proceeds
- Industry Opportunity and Market Size
- Competitive Positioning and Peer Comparison
- Key Strengths of Aye Finance
- Key Risks and Concerns
- Valuation Perspective
- Investment Outlook
- Conclusion
- FAQs
The Aye Finance IPO offers exposure to a niche NBFC focused exclusively on micro-MSME lending, a segment often discussed when users ask how small businesses get loans in India or which NBFCs focus on micro enterprises. With a growing loan book and pan-India presence, Aye Finance positions itself as a scalable lender addressing the structural credit gap faced by India’s smallest businesses.
For investors evaluating IPOs in the financial services sector, the key question is whether Aye Finance’s growth compensates for its relatively higher risk profile. This article evaluates the IPO from a fundamentals, valuation, and risk-adjusted return perspective.
The Aye Finance IPO is a book-built issue with a total size of ₹1,010 crore, combining a fresh issue and an offer for sale.
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Particulars
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Details
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IPO opening date
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February 9, 2026
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IPO closing date
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February 11, 2026
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Allotment date
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February 12, 2026
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Listing date
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February 16, 2026
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Issue size
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₹1,010 crore
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Fresh issue
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₹710 crore
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Offer for sale
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₹300 crore
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Price band
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₹122 to ₹129
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Lot size
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116 shares
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Minimum investment
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₹14,964
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Exchanges
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BSE and NSE
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The share allocation reserves 75% for qualified institutional buyers, 15% for non-institutional investors, and 10% for retail investors. This allocation structure indicates that institutional participation will largely determine overall subscription quality.
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Grey market premium levels in early February 2026 remain muted at ₹1 to ₹5, suggesting limited expectations of short-term listing gains.
Aye Finance was incorporated in 1993 and operates as a non-banking financial company specialising in working capital loans to micro-scale MSMEs. Its borrowers typically operate in manufacturing, trading, services, and agriculture-related activities.
Unlike consumer lenders or housing finance companies, Aye Finance focuses on enterprises with informal cash flows, limited documentation, and minor ticket requirements. This segment is frequently referenced in questions such as how micro businesses raise working capital or which NBFCs lend to small shop owners.
The company has no identifiable promoters and is backed by institutional investors, including CapitalG and LGT Capital. Professional management and institutional ownership are often considered positive governance indicators for long-term investors.
Aye Finance offers a diversified set of secured and unsecured loan products designed for micro enterprises.
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Product Type
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Share of AUM
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Secured hypothecation loans
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41%
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Unsecured hypothecation loans
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38%
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Mortgage loans
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19%
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Saral property loans
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2%
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The average loan ticket size is approximately ₹0.18 million, positioning the company firmly in the micro enterprise category. As of September 2025, Aye Finance served 586,825 active customers.
A significant portion of borrowers are first-time formal credit users, which supports growth but also increases credit risk. This characteristic frequently comes up in discussions around whether micro-MSME lending is riskier than traditional SME lending.
Aye Finance operates a phygital model combining physical branches with digital underwriting and collections infrastructure. As of September 2025, it had 499 branches across 18 states and 3 union territories.
The company employs over 10,400 people, with a large field force responsible for sourcing, verification, and collections. This branch-led model supports deeper penetration into Tier II, Tier III, and Tier IV towns, where banking access remains limited.
Such geographic reach often features in searches for NBFCs with pan-India MSME presence.
Aye Finance has demonstrated strong topline growth over recent years, driven by expanding disbursements and rising average loan balances.
| Metric |
FY23 / FY24 / FY25 / H1 FY26 |
| Total income (₹ crore) |
643 / 1,072 / 1,505 / 717 |
| PAT (₹ crore) |
40 / 172 / 175 / 107 |
| AUM (₹ crore) |
3,129 / 4,873 / 5,525 / 6,028 |
Revenue grew by approximately 41% year on year in FY25. Net interest margins stood at 15.31%, reflecting higher yields typical of micro-MSME lending. Return on equity ranged between 12% and 17% across periods.
However, profitability momentum slowed in FY26 due to rising credit costs. In Q2 FY26, revenue increased by 22% year on year, but profit after tax declined due to higher provisioning.
Asset quality is a critical evaluation parameter for Aye Finance IPO investors. Gross non-performing assets increased to 4.85% by September 2025, compared to 2.49% in FY23.
Credit costs rose to 5.15%, reflecting stress in unsecured loans and first-time borrowers. Approximately 37% of advances are to borrowers without prior formal credit history, which magnifies delinquency risks during economic slowdowns.
These trends are central to investor queries such as whether Aye Finance NPAs are a concern or how micro-MSME lenders manage defaults.
The company plans to use the ₹710 crore raised through the fresh issue primarily to strengthen Tier I capital. This capital infusion supports loan book expansion and improves regulatory capital adequacy.
A smaller portion will be allocated to general corporate purposes, including operational investments and brand visibility. The offer for sale component provides partial exits to existing shareholders and does not contribute capital to the company.
India’s MSME credit gap is estimated at approximately ₹117 trillion, with nearly 98% of micro enterprises underserved by formal lenders. NBFCs focused on micro businesses play a key role in bridging this gap.
Industry data suggests NBFC credit growth of 13% to 19% CAGR over the medium term, driven largely by MSME and business loans. Investors searching for sectors benefiting from MSME formalisation often encounter lenders like Aye Finance.
Compared with listed peers, Aye Finance operates at a smaller scale and with higher risk metrics but offers differentiated exposure to micro enterprises.
| Company |
Key Metrics |
| Aye Finance |
Revenue FY25: ₹1,460 crROE: 12%–17%GNPA: 4.21%–4.85% |
| SBFC Finance |
Revenue FY25: ₹1,306 crROE: 11.6%GNPA: Lower |
| Five Star Business Finance |
Revenue FY25: ₹2,848 crROE: 18.7%GNPA: Lower |
Peers benefit from stronger asset quality and operational efficiency, while Aye Finance trades on growth potential rather than current profitability leadership.
Compare Aye Finance IPO with other financial services and MSME-focused IPOs, and review all active and upcoming IPOs with structured data.
Aye Finance’s key strengths include its focused micro-MSME strategy, diversified loan products, and technology-driven underwriting framework. The company has built strong penetration in underbanked regions and maintains customer retention of approximately 49.5%.
Backing from reputed institutional investors enhances credibility and governance confidence. The scalable branch model supports long-term expansion as MSME credit demand grows.
The primary risk lies in asset quality deterioration. Rising GNPA levels, especially in unsecured lending, pose a downside risk to earnings stability. High leverage with a debt-to-equity ratio between 2.73x and 2.83x increases sensitivity to interest rate cycles.
Operational expenses remain elevated, with operating expenses averaging total assets at 9.27% and a cost-to-income ratio of around 50%. These metrics lag best-in-class peers and may constrain return expansion.
At the upper price band of ₹129, the valuation appears reasonable relative to peers trading at 12x to 27x price-to-earnings multiples. However, valuation comfort depends heavily on the company’s ability to stabilise asset quality and control credit costs.
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Investors who are frequently evaluating whether the Aye Finance IPO valuation is justified should weigh growth visibility against execution risks.
The Aye Finance IPO may suit long-term investors seeking exposure to MSME credit growth and willing to tolerate higher volatility. Institutional participation and post-listing asset-quality trends will be key monitoring indicators.
Risk-averse investors or those seeking near-term listing gains may find the muted grey market premium and rising NPAs less attractive.
Monitor post-listing performance and key financial indicators after allotment, follow Aye Finance IPO coverage with updated company insights.
The Aye Finance IPO represents a specialised play on India’s micro-MSME credit expansion. Strong revenue growth, wide geographic reach, and institutional backing support its long-term narrative. However, rising credit costs and asset quality pressures introduce meaningful risks. Investors should approach the IPO with a long-term horizon and clear risk awareness.
- What is the Aye Finance IPO opening date?
The IPO opens on February 9, 2026 and closes on February 11, 2026.
- Is Aye Finance IPO good for long-term investment?
It may suit investors bullish on MSME credit growth and comfortable with higher credit risk.
- What is the price band of the Aye Finance IPO?
The price band is ₹122-₹129 per share.
- What is the minimum investment in the Aye Finance IPO?
Retail investors need to invest a minimum of ₹14,964 at the upper price band.
- What are the key risks in the Aye Finance IPO?
Rising NPAs, high leverage, and exposure to informal micro enterprises are key risks.