Aye Finance FY26 Performance

Aye Finance Ltd. reported significant business performance for the fiscal year ended March 31, 2026. Assets Under Management (AUM) surged by 27% year-on-year to ₹7,044 crore, while disbursements increased by 20% to ₹5,169 crore. The company also reported improvements in asset quality metrics.

FY26 Performance Highlights

Aye Finance Ltd. has detailed its strong business performance for the fiscal year ending March 31, 2026.
The company's Assets Under Management (AUM) grew by 27% year-on-year to ₹7,044 crore.
Disbursements also showed robust growth, increasing by 20% to ₹5,169 crore during the same period.
Asset quality metrics demonstrated ongoing improvement. As of March 31, 2026, 1-90 Day Past Due (DPD) stood at 1.87%, and Gross Non-Performing Assets (GNPA) were reported at 4.77%.
Collection efficiency remained strong, with Non-Overdue (Non-OD) collection efficiency at 99.5% and Bucket 1 collection efficiency at 62.5%.

Why This Matters

This notable growth in AUM and disbursements highlights Aye Finance's expanding market reach and the strong demand for its lending products among micro and small enterprises (MSMEs).
The reported improvements in asset quality, particularly the lower DPD and stable GNPA, suggest that risk management strategies are being effectively implemented.

Company Background and Recent Trends

Aye Finance is a non-banking financial company (NBFC-ML) focused on micro-MSME lending. The company completed its Initial Public Offering (IPO) in February 2026, with shares listing on both BSE and NSE on February 16, 2026.
Leading up to this period, Aye Finance had demonstrated strong AUM growth, achieving a Compound Annual Growth Rate (CAGR) of 42.6% between FY23 and FY25. By September 2025, AUM had reached approximately ₹6,000 crore.
However, asset quality had presented challenges, with GNPA rising from 2.49% in March 2023 to 4.85% by September 2025. In the first half of FY26, Profit After Tax (PAT) fell by 40.1% year-on-year, attributed to impairment costs and Net Interest Margin (NIM) compression.

Outlook and Strategy

Looking ahead, the company's strategy will likely involve continued focus on expanding the loan portfolio. Aye Finance may further leverage its technology and cluster-based approach to capture market share.
Sustained improvement in asset quality metrics, if achieved, could lead to enhanced profitability and increased investor confidence.

Risks to Watch

The Gross NPA (GNPA) at 4.77% remains a key metric to monitor for potential stress in the loan book.
Bucket 1 Collection Efficiency at 62.5% indicates that a significant portion of near-term dues are not being collected promptly.
Aye Finance has faced regulatory fines from BSE for delayed financial disclosures, suggesting potential compliance pressures.
Past concerns regarding high credit costs and profitability constraints due to NIM compression and operational efficiency gaps (indicated by a high cost-to-income ratio) warrant close observation.

Peer Comparison

Aye Finance's AUM growth of 27% for FY26 appears strong when compared to its peers. However, its Gross NPA (GNPA) of 4.77% is higher than AU Small Finance Bank (2.30% as of 9M FY26) and Bajaj Finance (around 1.03%-1.21% in recent quarters). Cholamandalam Investment and Finance (4.57% GNPA as of Q2 FY26) and Shriram Finance (4.55% GNPA as of Q4 FY25) show comparable GNPA levels, but with significantly larger AUMs (₹2.14 lakh Cr and ₹2.63 lakh Cr respectively).

What to Track Next

Investors will be looking for continued AUM and disbursement growth in FY27.
Any further improvements or deteriorations in asset quality metrics, such as GNPA and DPD, will be crucial indicators.
Management commentary on collection efficiencies and strategies to improve the Bucket 1 collection rate will be a key focus.
Sustained profitability and operational efficiency will be important measures of business health.
Monitoring any further regulatory developments or compliance adherence post-IPO will also be relevant.