As an investor, it can be very challenging to decide whether the Aye Finance IPO is a good or bad investment. Not anymore, as in this blog, we will provide you with all the necessary details related to the Aye Finance IPO to help you decide whether you should Apply or Not. Read on to know the IPO risks, strengths, valuation, financial details, and expert opinion to make your investment decision better.
Strengths:
- Aye Finance is one of the leading lenders of secured and unsecured small business loans to micro-scale MSMEs.
- Over the 3 years, the company showed a stable financial growth, with consistent revenue of ₹1,504.99 crore as of FY25.
- With a strong track record of more than 10 years, the firm manages a loan book of around ₹6,000 crore.
- Over the last 3 years, the company has achieved a CAGR of 40%, building a strong reputation, especially in MSME lending.
Weaknesses:
- The company’s Gross NPA ratio has increased by 4.85% as of September 2025. If unable to control the level of Gross NPA can affect the company’s financial health.
- The firm offers about 35% of high unsecured loans (loans without taking any assest as security) to micro enterprises customers. If the borrower does not pay on time, or does not pay at all can adversely impact the business.
- In FY25, the company experienced a negative cash flow of ₹812 crore from operations.
- Aye Finance IPO retail quota is just 10%, which reduces the chance of getting allotment for retail investors.
Aye Finance IPO Review
| Reviewer | Recommendation |
| IPO Watch | May Apply |
| Canara Bank | |
| Swastika Investmart | Neutral |
Peer Comparison with the Company
| Name of the Company | Face Value(₹) | Basic EPS (₹) | Diluted EPS(₹) | RONW (%) | P/E Ratio | Basic NAV(₹) |
| Aye Finance | 2 | 9.51 | 9.34 | 12.12% | 24.64 | 90.00 |
| Global Listed Peers | ||||||
| SBFC Finance Limited | 10 | 3.21 | 3.15 | 11.57% | 27.32 | 29.61 |
| Five-Star Business Finance Limited | 1 | 36.61 | 36.50 | 18.65% | 12.07 | 215.22 |
Industry Peer Group P/E ratio
Among its peers, SBFC Finance Limited has the highest P/E ratio at 27.32, while Five-Star Business Finance Limited has the lowest at 12.07, with the industry average P/E standing at 19.70.
Expansion
- The proceeds raised from the fresh issue will be used to strengthen its capital base and support future business growth.
- Lastly, the remaining funds will be used for the expansion of its assets and general corporate purposes.
Aye Finance IPO – Should You Apply or Not?
Aye Finance has been transforming Micro and Small Enterprise financing in India through the fast-growing MSME lending segment. Over the past few years, the company has shown consistent revenue growth and a high CAGR of 40%. If we talk about the company’s financials, from FY22 to FY25, the company has provided excellent revenue of ₹1,504.99 and PAT of ₹175.25 in FY25.
During FY25, Aye Finance has provided a total of 71,311 fresh loans and 54,697 repeated loans. Overall, due to a solid loan book growth, industry experience, and expanding scale, the IPO seems attractive to many.
However, we cannot ignore the fact that rising NPAs, high unsecured lending figures, and increasing future credit risks. If we talk valuation, the company’s P/E ratio is 24.64x, which, if compared to peer competitors, seems to be fairly priced. As of Feb 6, the Aye Finance IPO GMP is ₹1 against the price of ₹129, indicating a listing gain of around 1% to 2%. If the GMP figures and market sentiment support, then investors can apply for the IPO in the short term.
Cautious investors must carefully analyze the risks, like growing NPAs, negative cash flow, and interest rate sensitivity, before subscribing.
Please note:
Investors are advised to make their own decisions and apply entirely at their own risk. This article is written using information from the company’s RHP (Red Herring Prospectus) data and online sources. If you have any queries, kindly contact the IPO Watch Team.
