The Indian BFSI sector is prepared for the Aye Finance IPO, which is open from 9 to 11 February 2026. While the company has established a niche in the micro-MSME lending industry, a slew of “Avoid” recommendations from major brokerages has raised serious concerns among individual investors.
The company’s Assets Under Management (AUM) have grown to over INR 6,000 crore, which is very impressive. However, underlying numbers imply that this growth may be adversely affecting the bottom line.
Aye Finance IPO Broker Calls: 🚩 The Asset Quality Alarm
Analysts are particularly concerned due to the steep decline in asset quality. Aye Finance’s Gross Non-Performing Assets (GNPA) have increased from 2.5% in FY23 to 4.9% as of H1 FY26.
- Rising Defaults: The company caters to small MSMEs in semi-urban areas that don’t have established credit histories; these MSMEs are more prone to disappointment when the economy is weak.
- Unsecured Exposure: A huge 38.0% of the company’s total AUM is still unsecured, which greatly raises the risk of loss if a loan stops paying.
- Sky-High Credit Costs: The company’s credit cost stands at 7%, which is very high when compared with its competitors, such as Five-Star Business Finance (0.7%) and SBFC Finance (0.9%).
Aye Finance IPO Broker Calls: 📉Constraints on Profitability
Despite an increase in sales, the amount of profit that can be retained by shareholders is decreasing. Profit After Tax (PAT) during the first half of FY26 fell by about 40.1% from the same time last year. Three primary factors trigger this drop:
- Impairment Costs: A sharp rise in provisions for bad loans.
- NIM Compression: Borrowing costs are reducing the net interest margins.
- Efficiency Gap: The cost-to-income ratio is still high at 52.62%, which is almost twice as high as that of certain competitors.
👥 The “Human” Risk: Attrition and Productivity
Lending to micro-enterprises is a “high-touch” business that requires large working teams. As of September 2025, Aye Finance is struggling with a high employee attrition rate of 65.53%. Such high turnover impacts sourcing and collections and adds to the already heavy operating expenses.
Aye Finance IPO Broker Recommendations
| Brokerage | Recommendation | Primary Reason |
| SBI Securities | AVOID | Rising GNPA (4.9%) and 40% PAT decline. |
| GEPL Capital | AVOID | Deteriorating asset quality and NIM compression. |
| Swastika Investmart | NEUTRAL | High exposure to sensitive micro-enterprise segments. |
| SAMCO | AVOID | Elevated operating costs and high employee attrition. |
Key Takeaway
At the upper price band of INR 129, Aye Finance had an adjusted P/BV of 2.0x. This price may appear “reasonable” compared to others, but it doesn’t consider the high cost of credit and the fact that profits are going down.
For retail investors, the consensus is clear. The MSME lending business is profitable, but Aye Finance’s present trend of rising bad loans and falling profitability shows that risk are outweighing the perks right now.
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