1. Who is Aye Finance Limited?

Founded in 2014, Aye Finance is a Gurugram-based Non-Banking Financial Company (NBFC) that specializes in providing credit to the "missing middle"—micro-enterprises that are too small for commercial banks but too large for microfinance.

Operational DNA:

Cluster-Based Lending: They use a unique "cluster" approach, studying specific industry hubs (like leather in Kanpur or textiles in Tirupur) to design custom credit scoring for informal businesses.

Marquee Backing: Rare for an SME-focused lender, it counts Google (CapitalG), Elevation Capital, and British International Investment (BII) as its primary investors.

Presence: Operates over 520 branches across 21 states, serving nearly 6 lakh active customers.

2. Key IPO Details & Timeline (Confirmed)

The company has finalized its offer structure, which is a mix of a fresh issue to fuel growth and an offer for sale by existing investors.

3. Financial Performance: Scaling Profitably

Aye Finance has shown consistent growth, though it faces the typical asset quality challenges of the MSME sector:

Revenue: Reached ₹1,505 crore in FY25, a 40% jump from the previous year.

Profitability: Reported a net profit of ₹175.3 crore (FY25). For the first half of FY26 (H1 ending Sept 2025), PAT stands at ₹64.6 crore.

Asset Quality: Gross NPA (Non-Performing Assets) increased slightly to 4.21% in FY25, reflecting the stress in the micro-enterprise segment.

Valuation: The IPO is priced at a Price-to-Book (P/B) value of approximately 1.45x, which is considered attractive compared to peers like Five-Star Business Finance.

4. Grey Market Premium (GMP) Update

As of February 6, 2026, the GMP for Aye Finance is ₹1.

Market Sentiment: The current GMP suggests a very conservative listing with a projected gain of ~0.8%. However, the anchor book (which includes institutional giants) is expected to provide more direction once the bidding data is released tonight.

5. Strategic Use of Proceeds

₹710 Crore (Fresh Issue): 100% of these funds will be used to augment the company's capital base. This will allow them to expand their loan book and meet future lending requirements.

₹300 Crore (Offer for Sale): This portion goes to the selling shareholders (early investors like CapitalG and A91 Emerging Fund), allowing them a partial exit.

6. Investment Analysis: Strengths vs. Risks

Strengths:

Deep Tech Integration: Proprietary "AyeScore" algorithm allows them to lend to businesses without formal financial papers.

Strong Liquidity: Adequate cash reserves and a diversified lender base (over 60 lenders).

Underserved Market: MSME credit gap in India is massive, providing a long runway for growth.

Risks:

Unsecured Exposure: A significant portion of the book is unsecured or semi-secured, making it sensitive to economic downturns.

Regulatory Changes: As an NBFC-ML (Middle Layer), they are subject to strict RBI oversight regarding capital adequacy.

7. Conclusion: A Fundamental Play for Patient Investors

Aye Finance isn't showing the high-speculative "listing pop" that some tech IPOs enjoy, but its fundamentals and high-profile backing make it a strong candidate for long-term portfolios. It is a pure play on the formalization of India’s micro-economy.