Aye Finance IPO Receives Lukewarm Reception from Investors
The initial public offering (IPO) of non-banking financial company (NBFC) Aye Finance has generated cautious attention across financial markets, with early indicators pointing towards a potentially muted debut. The Alphabet-backed firm commenced its public subscription period on February 9, with the issue scheduled to close on February 11. The company has established a price band ranging from ₹122 to ₹129 per equity share.
Grey Market Premium Remains Flat, Signaling Limited Enthusiasm
Market sentiment surrounding the Aye Finance IPO appears restrained, as evidenced by the grey market premium (GMP) holding steady at ₹0 as of February 10. This development suggests that shares are likely to list around ₹129, aligning precisely with the upper limit of the issue price band. The absence of any premium in unofficial trading channels reflects tempered expectations among speculative investors regarding immediate post-listing gains.
Subscription Data Reveals Slow Demand Across Investor Categories
The IPO subscription figures further underscore the cautious approach adopted by market participants. By 11:00 AM on the second day of the offering, the issue was subscribed merely 0.14 times overall. A detailed breakdown reveals that the retail investors' portion achieved 0.36 times subscription, while non-institutional investors displayed minimal interest with just 0.01 times bidding. The Qualified Institutional Buyers (QIB) segment saw 0.14 times subscription. In total, bids were received for 61.74 lakh shares against an extensive offer size of 4.25 crore shares.
Brokerage Firms Offer Divergent Views on Subscription Recommendation
SBI Securities provided a detailed analysis, noting that Aye Finance operates as an NBFC focused primarily on extending credit to underserved micro-scale enterprises across India. The brokerage highlighted the company's strategic shift towards an asset-backed lending model by increasing mortgage loans, which typically involve larger amounts and extended tenures. This transition is anticipated to gradually alleviate credit costs, which currently remain elevated at 7% on an annualized basis for the first half of fiscal year 2026.
SBI Securities also pointed out that profits witnessed a significant decline of nearly 40% year-on-year during 1HFY26. This downturn was attributed to heightened impairment costs, pressure on net interest margins, and escalating operating expenses. The brokerage firm emphasized that at the upper price band of ₹129, the issue is valued at an adjusted price-to-book value (P/BV) ratio of 2.0x on a post-issue capital basis.
"We would like to monitor the progress of reduction in credit cost with the company’s mortgage-heavy loan mix strategy. Hence, we recommend investors to AVOID the issue and track the company’s performance post listing," stated SBI Securities in its assessment.
In contrast, Master Capital Services adopted a more optimistic stance, emphasizing the company's strategic positioning within the MSME lending ecosystem and its concentration on small-ticket secured and semi-secured loans targeting underserved borrowers.
"With its focus on small-ticket, secured, and semi-secured business loans, the company caters to underserved micro enterprises that remain largely outside the formal credit ecosystem. Investors may consider the IPO as a potential long-term investment opportunity," commented Master Capital Services.
Comprehensive IPO Details and Financial Overview
Aye Finance aims to raise approximately ₹1,010 crore through this public offering. The issue comprises a fresh issue of 5.50 crore shares valued at ₹710 crore, alongside an offer for sale of 2.33 crore shares worth ₹300 crore. Prior to the public opening, the company secured ₹454.5 crore from anchor investors on February 6.
Key shareholders include Elevation Capital with a 16.03% stake, LGT Capital holding 13.99%, Alphabet via CapitalG at 13.14%, and Alpha Wave India with 11.1%. British International Investment and A91 Emerging Fund each maintain stakes exceeding 9%.
The IPO features a lot size of 116 shares, requiring a minimum retail investment of ₹14,964. The allotment process is expected to conclude on February 12, 2026, with listing anticipated on February 16, 2026, on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The company has indicated that proceeds from the offering will be utilized to address forthcoming capital requirements stemming from business expansion and asset development initiatives.
About Aye Finance: Business Model and Financial Performance
Incorporated in 1993, Aye Finance Limited specializes in providing both secured and unsecured working capital loans to micro-scale MSMEs operating across manufacturing, trading, services, and allied agriculture sectors. According to the Red Herring Prospectus (RHP), its listed peers include SBFC Finance Ltd, trading at a price-to-earnings (P/E) ratio of 27.32, and Five-Star Business Finance Ltd with a P/E ratio of 12.07.
For fiscal year 2025, Aye Finance reported a profit of ₹175.3 crore, showing a marginal increase from ₹171.7 crore in the preceding year. Meanwhile, net interest income demonstrated robust growth, surging 37.9% to reach ₹858 crore. As of September 30, 2025, the company maintained operations across 18 states and three union territories, serving approximately 5.9 lakh active customers with assets under management totaling ₹6,027.6 crore.
The IPO's lead managers include Axis Capital, IIFL Capital Services, JM Financial, and Nuvama Wealth Management, while Kfin Technologies Ltd. acts as the registrar for the offering.
