Aye Finance IPO: What Investors Should Know Before Subscribing

Aye Finance Limited, a market leader in the micro and small business-focused NBFC segment, has announced its intention to raise equity shares through an Initial Public Offering (IPO) of equity shares on its mainboard segment of the stock exchange with an offer size of ₹1,010 crores through a combination of a fresh issue and an offer for sale, as announced in February 2026. The following is an outline of the company, providing an overall picture of the company with regard to its IPO, subscription, financials, and allotment of shares.

IPO Overview

Aye Finance IPO is a book-building issue aggregating up to ₹1,010 crores. The issue comprises:

• Fresh Issue: 5.50 crore shares, totaling ₹710 crores
• Offer for Sale (OFS): 2.33 crore shares, totaling ₹300 crores

The IPO opened for subscription on February 9, 2026, and will close on February 11, 2026. The allotment is expected to be finalized on February 12, 2026, and shares are tentatively set to list on the BSE and NSE on February 16, 2026.

The price band for the IPO has been fixed at ₹122 to ₹129 per share, with a face value of ₹2 per share. The minimum lot size for retail investors is 116 shares, amounting to ₹14,964 at the upper price band.

IPO Reservation and Allocation

The Aye Finance IPO offers a total of 7,82,94,572 shares, allocated across different investor categories as follows:

The Aye Finance IPO raised ₹460.51 crore from anchor investors, with the anchor bid date being February 6, 2026. The lock-in period for anchor investors is structured as:

• 50% of shares: 30-day lock-in (till March 14, 2026)
• Remaining shares: 90-days lock-in (till May 13, 2026)

Company Overview 

Incorporated in 1993, Aye Finance Limited is an NBFC focused on providing secured and unsecured small business loans primarily to micro-scale MSMEs. Its products include Mortgage Loans, ‘Saral’ Property Loans, Secured Hypothecation Loans, and Unsecured Hypothecation Loans. The company serves 586,825 active customers across 18 states and three union territories, with a focus on small-ticket MSME financing, and has grown its workforce to 10,459 full-time employees as of September 30, 2025, up from 5,724 in FY23.

Financial Performance (Restated)

Figures in ₹ Crore

Aye Finance has reported steady growth in assets driven by the expansion of its MSME loan portfolio and wider geographic presence. Revenue has shown healthy growth over the years, though recent periods indicate some moderation following strong performance earlier. Profitability has been volatile, with pressure on margins impacting earnings despite business expansion. Borrowings have increased consistently to support loan growth, resulting in higher leverage, making funding costs and asset quality key factors to monitor going forward.

IPO Expenses

The IPO will incur expenses including:

• BRLMs fees, underwriting, and brokerage
• Processing fees for banks and intermediaries
• Registrar, legal, auditor, and advisory fees
• Regulatory, listing, printing, advertising, and marketing expenses

The IPO registrar is Kfin Technologies Ltd., and the lead managers include Axis Capital Ltd., IIFL Capital Services Ltd., JM Financial Ltd., and Nuvama Wealth Management Ltd.

Peer Comparison (Indicative NBFC / MSME Lending Peers)

(As on March 31, 2025)

Outlook & Relative Valuation

Aye Finance operates in the underpenetrated MSME lending space, supported by long-term trends such as financial inclusion, formalisation of small businesses, and rising credit demand. 

The company has expanded its AUM to about ₹60,276 million and serves a diversified base of over 5.8 lakh customers. Growth is aided by technology-led underwriting, improving operating leverage, and a gradual shift toward secured lending. However, profitability and asset quality remain moderate, with an average ROE of around 7.6%, ROA close to 2%, Gross NPA at about 4.85%, and Net NPA at 1.78%, indicating relatively higher credit risk inherent to the segment.

From a valuation perspective, the IPO is priced at around 1.35x post-IPO Price-to-Book at the upper price band of ₹129, which is lower than peers such as SBFC Finance (2.97x) and Five-Star Business Finance (2.05x). This discount reflects lower capital efficiency, as Aye Finance’s RoNW of 12.12% is significantly below Five-Star’s 18.6% and broadly in line with SBFC. Despite the lower P/B valuation, the implied earnings multiple remains relatively high compared to stronger peers, limiting valuation comfort. 

Any near-term re-rating will largely depend on improvement in profitability, normalisation of credit costs, and stability in asset quality. Overall, while the long-term growth opportunity remains strong, the risk-reward appears moderately balanced at current valuations.