Aye Finance IPO explained in simple English. Learn about the company’s business model, financial performance, strengths, risks, and which type of investors may consider this IPO. An educational guide for retail investors, not a buy or sell recommendation.
Table of Contents
Introduction
Aye Finance is coming to the stock market with its initial public offering IPO in February 2026. Many retail investors are looking at it because it lends money to very small businesses that banks often ignore.
This article explains the Aye Finance IPO in simple English. It covers what the company does, the key IPO details, its financial track record, strengths, risks, and which type of investor may consider it. This is only an educational guide and not a buy or sell call.
What is Aye Finance
Aye Finance Limited is a non-banking finance company or NBFC that gives business loans to micro and small enterprises across India. These are tiny shops and units in trading, services, and manufacturing that usually do not get loans from regular banks. The company was founded in 2014 by Sanjay Sharma and Vikram Jetley. It focuses on borrowers in the informal sector who often do not have proper financial statements or a long credit history.
Key Aye Finance IPO details
Based on the red herring prospectus and major IPO platforms, the current terms are as follows.
Basic IPO terms
- IPO size: About ₹1,010 crore in total
- Fresh issue: About ₹710 crore
- Offer for sale or OFS: About ₹300 crore. Existing shareholders are selling some of their shares
- Face value: ₹2 per share
- Price band: ₹122 to ₹129 per share
- Lot size: 116 shares. You must apply for at least one lot
- Minimum investment for retail: Around ₹14,000 to ₹15,000, depending on the final price
- IPO opens: 9 February 2026
- IPO closes: 11 February 2026
- Likely allotment date: 12 February 2026
- Tentative listing date on NSE and BSE: 16 February 2026
These dates and numbers can change slightly, so always cross-check with your broker or the official RHP on the SEBI website before applying.
Promoters and leadership
Aye Finance was co-founded by Sanjay Sharma and Vikram Jetley, both with long experience in banking and consumer finance.
Key people include:
- Sanjay Sharma – Founder and Managing Director. He is an alumnus of IIT Bombay and IIM Bangalore and has worked with HDFC Bank, Standard Chartered, ICICI, and other large financial firms.
- Govinda Rajulu Chintala – Chairman and Independent Director. He is the former Chairman of NABARD, with deep experience in rural and agricultural finance.
The company is also backed by well-known investors such as Elevation Capital, LGT Capital, CapitalG, Alpha Wave, British International Investment, and A91 Partners.
Business model in simple words
Aye Finance gives small business loans in the range of about ₹50,000 to ₹10 lakh to tiny enterprises. These include small manufacturing units, traders, and service providers.
Many of these borrowers do not have formal balance sheets or a strong credit score. To manage this, Aye Finance uses a cluster-based underwriting model. In simple terms, it studies groups of similar businesses in the same trade and area, understands their usual income and cost patterns, and then uses data and field checks to judge each borrower. The company calls its approach high tech and high touch. That means it uses technology and data models, but also has a large on-ground team across hundreds of branches to meet customers, verify details, and collect repayments. Its loan book is well spread across states and sectors, reducing dependence on any single region or line of business.
Financial performance overview
According to the DRHP and later updates, Aye Finance has grown quickly in recent years.
For the year ended March 2024:
- Revenue grew from about ₹643 crore in FY23 to about ₹1,072 crore in FY24. That is growth of around 67 percent.
- Profit after tax rose sharply from about ₹44 to ₹47 crore in FY23 to about ₹171 to ₹172 crore in FY24. That is a growth of nearly three times.
- Total assets increased from about ₹3,129 crore to about ₹4,873 crore.
- Assets under management or AUM, which is the total loan book, were close to ₹4,980 crore as of September 2024.
On the quality side, the company reported:
- Net NPA or net non-performing assets of about 0.9 percent in FY24. NPA means loans where the borrower has stopped paying for a period. Lower is better.
- Provision coverage ratio of about 72 percent. This means it has set aside money as a buffer for most of the expected loan losses.
- Return on equity or ROE of around 17 percent and a debt to equity ratio of about 2.8.
These numbers show strong growth, improving profits, and the current control of bad loans. But these are past figures and can change if the economy or credit cycle turns.
Strengths of Aye Finance
Some points that may attract investors are:
- Focus on micro and small enterprises
Aye targets a huge underserved market. Many of these borrowers are not properly served by banks, which leaves space for specialist lenders. - Specialised underwriting model
Its cluster-based and data-driven credit assessment helps it lend to customers without formal documents, while trying to manage the risk. - Strong growth in revenue and profit
The company has shown fast growth in revenue and profits between FY23 and FY24, along with expansion in its branch network and loan book. - Good asset quality so far
Net NPA at about 0.9 percent and a high provision coverage ratio indicate that loan losses are currently under control compared to many peers in the same segment. - Experienced leadership and reputed investors
The presence of seasoned promoters, a professional board, and well-known global investors can provide comfort about governance and access to capital.
Key risks and concerns
Investors should also look at the other side of the story.
- High credit risk segment
Aye Finance serves borrowers with little documentation and limited credit history. If the economy slows down or these small businesses face stress, defaults can rise quickly. - Rising competition in MSME lending
Many banks, small finance banks, and other NBFCs are also trying to lend to MSMEs. Competition can put pressure on loan yields and margins. - Dependence on borrowed funds
As an NBFC, Aye depends heavily on funds from banks and capital markets. Any trouble in raising funds at good rates can hurt growth and profitability. - Regulatory and interest rate risk
Rules for NBFCs and MSME lending can change. Higher interest rates also make borrowing costlier for Aye and its customers. - Valuation risk
Even a good company can be a poor investment if the IPO is priced too high. Retail investors should compare the valuation with other listed NBFCs in the MSME and microfinance space before deciding.
Who may consider this IPO, and who should avoid it
This IPO may be worth deeper study for:
- Investors who understand the lending business and are comfortable with the ups and downs of NBFCs.
- Those with a long-term view who can hold through credit cycles and short-term volatility.
- Investors who want exposure to India’s micro and small business growth story and are ready to take a higher risk for possibly higher returns.
This IPO may not suit:
- Very conservative investors who want stable income and low risk.
- People who cannot handle sharp price swings after listing.
- Investors are looking only for quick listing gains without understanding the business or its risks.
Conclusion
The Aye Finance IPO offers retail investors a chance to understand and participate in a niche part of India’s credit market. The company focuses on micro and small businesses that are often ignored by traditional banks, using a mix of technology, data, and on-ground checks to manage lending risk. Its recent financial performance shows strong growth in revenue and profits, along with relatively stable asset quality for this segment. At the same time, this is a high-risk business. Lending to informal enterprises can turn risky during economic slowdowns, and NBFCs remain sensitive to funding costs, regulation, and competition. For investors, this IPO should be viewed as a long-term, higher-risk opportunity linked to the MSME growth story, not a guaranteed wealth creator. Retail investors should read the prospectus carefully, compare valuations with peers, and think about their own risk tolerance before making any decision.
Source: Aye Finance IPO Details & Aye Finance Limited files DRHP with SEBI for Rs 1,450 crore IPO
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