Aye Finance IPO

It works in the micro-enterprise space (small businesses) and has built real scale here: 586,825 active customers and assets under management (AUM - the total value of loans it manages) of ₹6,027.62 crore as of September 30, 2025. It also has a pan-India footprint, with 568 branches across 18 states, which helps it reach customers deeply rather than just being present on paper.

It’s also spread out well across India, which lowers geographic risk. No single state contributes more than 16% of its assets. Its top five states, Bihar, Uttar Pradesh, Rajasthan, Madhya Pradesh, and Maharashtra, make up 57.00% of the total loan book, so it has focus, but it’s not overly dependent on just one region.

The business earns healthy spreads. Its Net Interest Margin (NIM - the difference between what it earns on loans and what it pays for funding, as a percentage) was 14.12% annualized for the six months ended September 30, 2025. That’s supported by high yields (the average interest it earns on its loan portfolio), which were 25.39% in the same period.

A lot of its borrowers don’t have formal income proof, so instead of relying on documents the way banks do, it uses a “cluster-based” method. Basically, it studies the real cash patterns of 70+ specific business clusters (say, shoe manufacturing or making grass brooms) and uses that data to judge whether a borrower can repay. This kind of in-house dataset helps it lend where traditional banks usually can’t.

On the funding side, it isn’t relying on just one lender type. It has raised money from 25 private banks, 26 NBFCs (non-bank lenders), and international lenders as well. As of September 30, 2025, its borrowings were fairly balanced: 59.02% from term loans (regular bank-style loans) and 28.95% from non-convertible debentures (NCDs - bonds that don’t convert into shares), which reduces the risk of any single funding tap drying up.

The loan book is looking a bit weaker than before. Its Gross Non-Performing Asset (GNPA - the share of loans where borrowers have stopped paying) rose to 4.85% as of September 30, 2025, from 3.32% a year earlier. That kind of jump usually means more borrowers are under stress, and the company may have to set aside more money as provisions (a safety buffer for possible losses), which can pull down profits.

A meaningful chunk of its lending is unsecured, meaning there’s no collateral (no asset like property or gold backing the loan). As of September 30, 2025, unsecured loans were 37.97% of total assets. If more of these borrowers default, recovery is harder because there isn’t anything concrete to fall back on, and that can translate into higher losses.

Staff retention seems to be a real pain point here. The attrition rate was 65.53% for the six months ended September 30, 2025, which is extremely high. When people keep leaving, the company has to spend time and money hiring and training replacements, and that can disrupt day-to-day work like customer service and collections.

Running the business is getting more expensive. Its cost-to-income ratio (how much it spends to earn 1 rupee of income) was 52.62% for the six months ended September 30, 2025, up from 48.39% the year before. In simple terms, expenses are rising faster than income, which is not great for long-term profitability.

It’s been using more cash in the business than it’s generating from day-to-day operations. For the period ended September 30, 2025, operating cash flow was negative at ₹454.88 crore. If that continues, it may need to depend more on outside funding (borrowings or fresh capital) to keep growing.

The returns for shareholders have come down sharply. Return on Equity (RoE - how efficiently the company turns shareholder money into profit) fell to 7.63% annualized for the six months ended September 30, 2025, from 15.26% in the same period last year. That drop suggests the business is currently generating less profit for every rupee of equity it has.