Back

Aye Finance IPO: Growth Opportunity or a Risky Bet?

9 Feb, 2026

4 mins read

India’s micro-entrepreneurs are often overlooked by large banks, and this is exactly where Aye Finance steps in. Backed by heavyweight investors like Alphabet's CapitalG, Elevation Capital, and British International Investment, the company looks promising at first glance. However, with a 40% YoY drop in profits in H1 FY26, does this IPO still offer value to retail investors?

Let’s break down the Aye Finance IPO and find out if it's worth your attention, or your money.

Company Overview: What Does Aye Finance Do?

Aye Finance is a Non-Banking Financial Company (NBFC) targeting micro-scale MSMEs (Micro, Small and Medium Enterprises) in India. These are often one-person or small family-run businesses that fall through the cracks of formal lending.

Features of Aye Finance’s Business Model

Target Customers: Micro-businesses with annual turnovers between ₹20 lakhs and ₹1 crore, mostly in semi-urban areas.
Loan Products: Mortgage loans, ‘Saral’ Property Loans, and both secured and unsecured hypothecation loans.
Cluster-Based Lending Model: Uses AI-driven underwriting to assess cash flows of small retailers, manufacturers, and traders.
Active Customer Base: Over 5.8 lakh unique borrowers.
Assets Under Management (AUM): Over ₹6,000 crore.

Financial Performance: Scale with Margin Pressure

While revenue has increased, margins have taken a hit. Let’s look at the key numbers:

Metric	FY24	FY25
Total Income	₹1,072 Cr	₹1,505 Cr
Net Profit (PAT)	₹172 Cr	₹175.3 Cr
H1 Profit Drop (YoY)	₹107.8 Cr → ₹64.6 Cr	▼ ~40%

Why Did Profits Drop?

Rising credit costs
Higher share of low-yield mortgage loans
Net Interest Margin (NIM) compression due to loan mix changes

Aye Finance IPO: Key Details

Detail	Information
IPO Dates	Opens Feb 9, Closes Feb 11, 2026
Price Band	₹122 – ₹129 per share
Lot Size	116 shares
Issue Size	₹1,010 Cr (Fresh: ₹710 Cr, OFS: ₹300 Cr)
Listing Date (Tentative)	Feb 16, 2026

Growth Potential: Key Opportunities

Here’s why this IPO could be attractive:

Huge MSME Credit Gap: Estimated at ₹34 trillion in India.
Policy Support: The Union Budget has given significant attention to the MSME sector.
Tech-Driven Operations: AI and machine learning improve credit assessment and collections.
Strong Investor Backing: Includes Alphabet, Elevation Capital, and British International Investment.

Risks You Shouldn’t Ignore

Every investment has risks, and Aye Finance is no exception:

Risk	Description
Rising NPAs	GNPA rose from 3.32% to 4.85% in H1 FY26
Unsecured Loan Exposure	38% of AUM is in unsecured loans
Profitability Concerns	Volatility in earnings due to changing loan portfolio

Should You Apply for the Aye Finance IPO?

Aye Finance is not your typical NBFC. It caters to India’s “missing middle” and uses tech for smarter lending. The growth potential is massive, but the risks from rising NPAs to shrinking profit margins are equally important.

Conclusion

Aye Finance’s IPO is a mix of innovation, scale and risk. Its mission to fund underserved MSMEs using AI is commendable and future-facing. However, short-term profitability issues and asset quality concerns require cautious evaluation.

If you understand micro-lending and believe in tech-driven NBFCs, Aye Finance could be on your watchlist. But don’t forget - always do your own research (DYOR) before investing.

Disclaimer:

This blog is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any securities. Readers should conduct their own research or consult a qualified financial advisor before making any investment decisions.