Let’s break Aye Finance IPO in very easy language, using actual company RHP data, and also compare it with similar NBFCs so you can take an informed decision.

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🔍 What does Aye Finance do?

Aye Finance is a Non-Banking Financial Company (NBFC) that gives loans to small businesses like:

• Kirana stores

• Small manufacturers

• Traders, workshops, service businesses

These are businesses that usually do not get easy bank loans, so NBFCs like Aye Finance step in.

👉 In simple words:
Aye Finance lends money to very small businessmen across India.

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🔐 Are Aye Finance loans secured or unsecured?

This is a very important question.

👉 Answer: Aye Finance gives BOTH secured and unsecured loans.

Loan mix (from company RHP):

Loan Type	Simple Meaning	Approx Share
Secured Loans	Machinery / stock kept as security	~40–42%
Unsecured Loans	No proper collateral	~38–41%
Property Loans	Loan against property	~15%

📌 Key takeaway:
A large portion of loans are unsecured, which means:

• Higher interest income

• But higher risk of default

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📉 What is NPA and why does it matter?

NPA (Non-Performing Asset) means:

Customer has stopped paying EMIs for a long time.

Lower NPA = safer NBFC
Higher NPA = more risk

Aye Finance NPA trend (as per RHP)

Period	Gross NPA
FY23	~2.5%
FY24	~3.3%
FY25	~4.2%
Latest (Sep/Jun FY26 data)	~4.8%

⚠️ Clear warning sign:
NPAs are continuously increasing.

This shows stress among small business borrowers.

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🧯 Is the company prepared for bad loans?

Yes, to some extent.

• Aye Finance keeps provisions (money set aside for bad loans)

• Provision Coverage Ratio is around 60–70%

• This reduces sudden shock to profits

📌 But still:

Rising NPAs mean profits can remain under pressure in future.

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🆚 Comparison with similar NBFCs

Let’s compare Aye Finance with same-type lenders:

Company	Customer Type	Gross NPA	Risk Level
Aye Finance	Small MSMEs	~4.5–4.8%	⚠️ Higher
Ujjivan Small Finance Bank	Micro borrowers	~2–3%	Medium
CreditAccess Grameen	Rural loans	~1.5–2%	Lower
Spandana Sphoorty	Microfinance	~3–4%	Medium

What does this comparison tell us?

• Aye Finance has higher NPAs than peers

• Reason: more unsecured business loans

• Risk is above average in NBFC space

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🏦 What did RBI announce recently for NBFCs?

Many people think RBI policy is only about repo rate, but that’s not true.

Recent RBI policy reliefs (important for NBFCs):

✔️ Collateral-free MSME loan limit increased
→ Helps expand formal lending to small businesses

✔️ RBI signaled regulatory easing & liquidity support tools for NBFC ecosystem

✔️ Stable interest rate environment helps NBFC funding costs

📌 Reality check:

• RBI support helps the system

• But RBI cannot fix rising NPAs

• Loan recovery still depends on borrower health

👉 So RBI policy is mildly positive, not a game-changer.

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📊 IPO demand & listing gain expectations

Based on market indicators:

• Grey Market Premium (GMP): Very low

• IPO is reasonably priced, not cheap

• Large institutional investors already present

Expected outcome:

• Oversubscription: Moderate

• Listing gain: Low to single-digit

• Not a “listing day jackpot” IPO

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✅ Positives of Aye Finance IPO

✔️ Strong presence in MSME lending
✔️ Backed by reputed global investors
✔️ Large underserved market
✔️ RBI supportive stance for MSME credit

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⚠️ Risks you must not ignore

❌ Rising NPAs year after year
❌ High unsecured loan exposure
❌ Profit pressure due to higher credit cost
❌ Economic slowdown impacts small businesses first

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🧠 Final Verdict (Simple & Honest)

Aye Finance is a growth-focused NBFC but with higher risk.

Who should apply?

✔️ Long-term investors
✔️ Investors comfortable with NBFC risk
✔️ Those investing with small allocation only

Who should avoid?

❌ Listing-gain seekers
❌ Conservative investors
❌ Those uncomfortable with rising NPAs

⚠️ Disclaimer 

This document is issued by AG Analyst, a SEBI Registered Research Analyst (Registration No.: INH000011501).

The information provided in this blog is for educational and informational purposes only and does not constitute an offer, solicitation, or recommendation to buy, sell, or subscribe to any securities or IPO.

The IPO views, analysis, and opinions expressed herein are based on information available in the Draft Red Herring Prospectus (DRHP) / Red Herring Prospectus (RHP), publicly available sources, and other information believed to be reliable. However, no representation or warranty, express or implied, is made as to the accuracy, completeness, or reliability of such information.

Investment in securities, especially Initial Public Offerings (IPOs), is subject to market risks, including but not limited to volatility, liquidity risk, business risk, and regulatory risk. Investors are advised to read the RHP carefully, understand the risks involved, and consult their financial advisor before making any investment decision.

The views expressed are independent and unbiased and do not guarantee any specific return or performance. Past performance of the company or sector is not indicative of future results.

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🔍 Conflict of Interest Disclosure

• The Research Analyst, its proprietor, or associates may or may not have financial interest or holdings in the securities discussed at the time of publication.

• The Research Analyst has not received any compensation from the company mentioned in this IPO for issuing this analysis.

• The Research Analyst has not managed or co-managed the public issue, nor received any merchant banking, brokerage, or underwriting fees from the issuer.

• The Research Analyst has not received any consideration from the issuer or its associates for preparation or publication of this report.

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📌 Liability Disclaimer

The Research Analyst shall not be liable for any direct or indirect losses, including loss of capital, arising from the use of information provided in this blog. Readers are solely responsible for their investment decisions.

This report is intended solely for Indian residents and is not meant for distribution to any person in any jurisdiction where such distribution would be contrary to local laws or regulations.