The Aye Finance IPO has opened for subscription, drawing attention from investors looking to participate in India’s expanding MSME lending market. The company, a leading Non-Banking Financial Company (NBFC) focused on micro and small enterprises, is aiming to raise Rs 1010 crore through its public issue. The IPO comes at a time when credit demand from small businesses remains strong, supported by improving economic activity and government-backed initiatives promoting entrepreneurship.

The issue is structured as a Book Built Issue, comprising a fresh issue of shares worth Rs 710 crore and an Offer for Sale (OFS) worth Rs 300 crore. The IPO opened on February 9, 2026, and will close on February 11, 2026. The company is expected to finalise allotment on February 12, 2026, and list on the BSE and NSE on February 16, 2026.

Company Background and Business Model

Aye Finance Limited is a well-established NBFC catering primarily to micro and small enterprises (MSMEs) across India. Unlike large corporate-focused lenders, the company serves small shopkeepers, manufacturers, traders, service providers, and other informal business operators who often struggle to secure loans from traditional banks.

The company earns revenue mainly through interest income on loans. Its lending portfolio includes both secured and unsecured loans, depending on borrower profile and risk assessment. Over the years, Aye Finance has built expertise in underwriting loans to informal businesses that may lack formal documentation but demonstrate consistent cash flows.

A key differentiator is its branch-led phygital model. This combines physical branch networks for sourcing customers with technology-based underwriting systems. The physical presence helps in building trust and assessing ground realities, while digital tools assist in faster credit decisions and risk monitoring. This hybrid model allows Aye Finance to operate efficiently in semi-urban and rural markets.

Details of the IPO

The price band for the IPO has been fixed at Rs 122 to Rs 129 per equity share. At the upper end of the price band, the company’s market capitalisation is estimated at Rs 3183.52 crore.

The lot size is 116 shares. Retail investors need to apply for at least one lot, requiring a minimum investment of Rs 14964 at the upper price band. High-Net-Worth Individuals (HNIs) must apply for a minimum of 14 lots, translating into an investment of Rs 209496.

The IPO consists of two components. The fresh issue of Rs 710 crore will bring new capital into the company. This amount is likely to be used to strengthen the capital base and support future loan growth. The Offer for Sale component of Rs 300 crore allows existing shareholders to partially divest their holdings.

The book-running lead managers for the issue include Axis Capital Limited, IIFL Capital Services Limited, JM Financial Limited, and Nuvama Wealth Management Limited. The registrar to the issue is KFin Technologies Limited.

Grey Market Premium Update

The current Grey Market Premium (GMP) for Aye Finance IPO stands at Rs 0. This indicates neutral sentiment in the unofficial market ahead of listing. However, investors should note that GMP is not an official indicator and should not be the sole basis for investment decisions. It reflects speculative demand in the unregulated grey market and may change depending on overall market conditions and subscription levels.

MSME Lending Opportunity in India

India’s MSME sector plays a crucial role in economic growth. It contributes significantly to GDP, employment, and exports. Despite its importance, the sector remains under-served in terms of formal credit access. Many small businesses operate without audited financial statements, making traditional bank lending challenging.

NBFCs like Aye Finance fill this gap by offering customised lending solutions tailored to the needs of small entrepreneurs. The government’s focus on financial inclusion, digital payments, and credit guarantee schemes has further supported the sector.

The demand for MSME credit is expected to grow steadily in the coming years, driven by economic recovery, rising consumption, and increased formalisation of small businesses. Aye Finance aims to benefit from this trend by expanding its loan book and strengthening its distribution network.

Strengths of Aye Finance

One of the major strengths of the company is its deep understanding of informal business segments. Unlike larger banks, which rely heavily on formal documentation, Aye Finance uses field-level insights and alternative data for underwriting.

Its branch network enables strong customer engagement and monitoring. This reduces credit risk and enhances repayment discipline. The integration of technology allows faster loan processing and improved operational efficiency.

Another strength lies in its diversified loan portfolio. By spreading exposure across multiple small borrowers rather than a few large ones, the company mitigates concentration risk.

Risks and Challenges

Like any NBFC operating in the MSME segment, Aye Finance faces certain risks. The primary risk is credit risk. Small businesses are more vulnerable to economic slowdowns, inflation, and disruptions. Any decline in business activity can impact repayment capacity.

Regulatory risk is another factor. The NBFC sector is regulated by the Reserve Bank of India. Changes in capital requirements, provisioning norms, or interest rate regulations could affect profitability.

Competition is increasing in the MSME lending space. Banks, small finance banks, and fintech companies are aggressively expanding their presence. This may put pressure on margins and customer acquisition costs.

Additionally, interest rate fluctuations can influence borrowing costs and net interest margins. Effective asset-liability management is critical for maintaining stability.

Use of IPO Proceeds

The proceeds from the fresh issue are expected to strengthen the company’s capital base. A stronger capital position enables the NBFC to expand its loan portfolio while maintaining regulatory compliance.

Increasing capital adequacy allows Aye Finance to lend more without significantly raising leverage. This supports sustainable growth in the medium to long term.

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