Aye Finance Ltd IPO

About Aye Finance IPO

Aye Finance Ltd will soon launch its IPO, which will comprise a fresh issue and an offer for sale. While the fresh issue size is pegged at ₹885 crores, the offer for sale will include equity shares aggregating up to ₹565 crores. The shares will be credited to the demat account on TBA. The allotment of shares will take place on TBA and the initiation of refunds will take place on TBA.

Objectives of Aye Finance Ltd

• Augmenting their capital base to meet the company’s future capital requirements arising out of growth of their business and assets (referred to herein as the “objects”)

• The company expects to receive the benefits of listing of the Equity Shares on the stock Exchanges, including enhancement of the Company’s brand name and creation of a public market for equity shares in India

Industry Outlook

As of Fiscal 2024, secured retail loans reached ₹49.6 trillion and ₹50.9 trillion in first quarter of Fiscal 2025. It grew at a CAGR of 15% from Fiscal 2019 to Fiscal 2024. The Indian retail credit market has grown at a strong pace over the last few years and is expected to grow further at 14% to 16% between Fiscal 2024 and Fiscal 2027, with risks evenly balanced. The credit growth of NBFCs which has trended above India’s GDP growth historically, is expected to continue to rise at a faster pace. NBFCs have shown remarkable resilience and gained importance in the financial sector ecosystem, during fiscals 2019 to 2024, NBFC credit is estimated to have witnessed a growth at a CAGR of approximately 12%. NBFC Credit is expected to grow at a CAGR of 15% to 17% between Fiscal 2024 and Fiscal 2027.

Company Information

Aye Finance Ltd is a middle-layer NBFC (NBFC-ML) that provides loans to micro-scale MSMEs across India, offering business loans for working capital and expansion, secured through hypothecation or property collateral. It serves manufacturing, trading, service, and allied agriculture sectors, ranking among the leading NBFCs for underserved micro enterprises. As of September 30, 2024, it had 508,224 active customers across 18 states and three union territories, with an AUM of ₹49,79.76 crore (Source: CRISIL Report). Specialising in small-ticket loans averaging ₹0.015 crore, its expertise in underwriting business cash flows ensures stable credit costs and profitable growth.

Risks of Aye Finance Ltd IPO

• They are subject to the risk of non-payment or default by their borrowers which may adversely affect their business, results of operations and financial condition.

• The company's operations rely on the accuracy of information from customers and third-party service providers. Any erroneous or misleading data could impact creditworthiness assessments and the valuation or title verification of collateral, potentially affecting lending decisions.

• A significant portion of the company's unsecured loans accounted for 41.47%, 33.89%, 37.91%, 30.26%, and 36.61% of the company’s AUM in the six months ended September 30, 2024, and 2023, and in Fiscals 2024, 2023, and 2022, respectively. Failure to recover these receivables on time or at all could negatively impact its business, operations, cash flows, and financial condition.

• The company is exposed to interest rate risk, as fluctuations in interest rates could impact its net interest income and net interest margin. Such volatility may adversely affect its operational results and cash flows.

IPO Registrar and Book Running Lead Manager

KFinTechnologies Limited is the registrar of the Aye Finance Ltd IPO. The book-running lead managers are:

• Axis Capital Limited
• IIIFL Capital Services Limited(formerly known as IIFL Securities Limited)
• JM Financial Limited
• Nuvama Wealth Management Limited

Business Model

Aye Finance is a non-banking financial company –middle layer (“NBFC-ML”) focused on providing loans to micro scale micro, small and medium enterprises (“MSMEs”) across India. We offer a range of business loans for working capital and business expansion needs, against hypothecation of working assets or against security of property to customers across manufacturing, trading, service and allied agriculture sectors.

The company follows a ‘phygital’ business model, integrating a high-touch branch approach with advanced digital capabilities. Its success depends on adapting to technological advances, evolving customer needs, and industry trends in a cost-effective and timely manner

Company Growth Trajectory

Aye Finance Ltd’s AUM grew at a CAGR of 60.69% between Fiscal 2022 and Fiscal 2024, reaching ₹4,979.76 crore as of September 30, 2024. It was the fastest-growing NBFC among peer MSME-focused NBFCs, with a 64.00% year-on-year AUM growth in Fiscal 2024 (Source: CRISIL Report). Its well-diversified presence ensures no single state contributes more than 15.00% of AUM, with the top five states collectively accounting for 53.54%. AUM distribution across four zones—North (34.91%), East (25.99%), West (22.49%), and South (16.61%)—supports balanced growth.

How to Check the Allotment Status of Aye Finance Ltd?

You can check the allotment status of shares either on the website of the Bombay Stock Exchange (BSE) or on the website of Bigshare Services Private Limited. To check the status on the BSE website:

• Visit the BSE website
• Click on “Investor Services” and choose “Application Status Check”
• Choose the issue type — Equity or Debt
• Select the Issue Name from the drop-down. The issue name is the company’s name, which is Aye Finance Ltd
• Enter your application number or PAN number
• Check the box which says “I’m not a Robot” and click on “Search” to know the allotment status

To check status on the website of Bigshare Services Private Limited:

• Visit the website of KFin Technologies Limited
• Click on products.
• Click on IPO Allotment Status
• Choose the name of the company from the ‘Select Company’ dropdown
• Enter any of these - PAN Number, Application Number, DP/Client ID, Account Number / IFSC
• Click on Submit to check the status

How to Apply for Aye Finance Ltd?

Here are the steps to apply for Aye Finance Ltd:

• Step 1: Log in to your Kotak Securities Demat account - Log in to your Demat account to access IPO investments. Next, select the current IPO section.
• Step 2: Specify IPO details - Enter the number of lots and the price you wish to apply for.
• Step 3: Enter UPI ID - After entering your UPI ID, click submit. This will place your bid with the exchange.
• Step 4: Mandate Notification - Your UPI app will receive a mandate notification to block funds.
• Step 5: Approve Request - Your funds will be blocked once you approve the mandate request on your UPI.