Aye Finance reported a profit of ₹75 crore for Q1 FY27, yet its stock price fell 6.30% to ₹177.22. While net interest income rose 38% and asset quality improved, the market reaction reflects investor caution despite the strong quarterly performance and credit rating upgrades.
Detailed Coverage
Aye Finance, a lender focused on micro-enterprises, posted a 144% increase in profit after tax for the first quarter of fiscal year 2027. The company earned ₹75 crore in the quarter ending June 30, 2026, compared to ₹31 crore in the same period last year. Despite these earnings, the company's shares faced selling pressure on the National Stock Exchange, closing at ₹177.22, a decline of 6.30% from the previous session.
The stock's decline happened on a day of heavy activity, with 60.40 lakh shares traded for a total value of ₹109.60 crore. This price movement contrasts with the company's recent peak, as the stock hit a 52-week high of ₹197.29 just one day before the announcement.
Financial Growth and Operational Metrics
The company's revenue growth was supported by a 38% rise in net interest income, which reached ₹322 crore. Total income for the quarter grew by 22% year-on-year to ₹490 crore. The total assets under management, representing the size of the loan book, grew 28% compared to the previous year and 4% sequentially to ₹7,324 crore. Disbursements for the quarter reached ₹1,219 crore.
Aye Finance reported that its gross non-performing assets, a measure of bad loans, decreased to 4.49%, showing an improvement of 28 basis points over the previous quarter. The company also reported an improved net interest margin of 15.9%, which reflects the difference between the interest earned on loans and the interest paid on borrowings.
Credit Outlook and Future Targets
Reflecting the improved financial performance, India Ratings & Research recently upgraded the company’s long-term rating to IND A+ from IND A, with a stable outlook. The agency also upgraded the rating for its commercial papers to IND A1+. This upgrade typically signals an improved ability of a company to meet its debt obligations.
Looking ahead, the management has provided growth guidance for fiscal year 2027. They anticipate assets under management to grow between 25% and 30%. The company also aims for credit costs, which are expenses set aside for potential loan losses, to range between 3.5% and 4.0%, and a return on assets between 4.0% and 4.5%. With a network of 571 branches across 18 states, the company serves approximately 6.7 lakh active borrowers. Investors will likely track whether the company can maintain these growth and asset quality targets in the coming quarters while managing the seasonal variations in loan disbursements.