Aye Finance shares make muted market debut, list flat at IPO price

Aye Finance listing ceremony at NSE

• Aye Finance listed at Rs 129, matching its IPO price on NSE
• IPO saw 97 percent subscription, retail portion at 77 percent
• Analysts recommend holding due to MSME lending growth potential

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The share of Aye Finance made a muted market debut on February 16, listing at Rs 129 apiece on NSE. This marks zero premium over the IPO price.

The shares of the company debuted with a market capitalization of Rs 3,183.52 crore.

After the muted market debut, the stock slipped into the red to close at Rs 128.80 apiece. This marks a discount of 0.16 percent from the IPO price of Rs 129 apiece.

The muted market debut comes after the initial public offering of the non-banking financial company (NBFC) saw tepid response during its three days of public bidding. The Rs 1,010-crore IPO was subscribed 97 percent between February 9 and February 11 at a price band of Rs 122-129 per share.

The portion for retail individual investors (RIIs) subscribed 77 percent, while the quota for qualified institutional buyers (QIBs) received 1.5 times subscription. The part for non-institutional investors subscribed a mere 5 percent.

Listing vs grey market estimates:

Despite muted performance, the listing has beaten grey market estimates. Ahead of listing, the unlisted shares of the company were trading with a discount of 1.55 percent over the IPO price at Rs 127 apiece, according to data on Investorgain.

According to IPO Watch, the unlisted shares were trading flat at the IPO price.

Aye Finance IPO:

Aye Finance had launched its IPO to raise Rs 1,010 crore through a fresh issue of shares worth Rs 710 crore and an offer-for-sale (OFS) of shares worth Rs 300 crore by Alpha Wave India, MAJ Invest, CapitalG, LGT Capital, and Vikram Jetley.

The IPO of the Gurugram-based non-banking finance company (NBFC) was open for public bidding between February 9 and February 11 at a price band of Rs 122-129 per share. Investors can bid for a minimum of 116 shares, requiring an investment of Rs 14,152 at the upper price band, and in multiples thereafter.

The NBFC on February 6 mobilised Rs 454.5 crore from 19 anchor investors. The company on Friday said it has finalised allocation of 3.52 crore equity shares to anchor investors at the upper price band. Nippon Life India, and Goldman Sachs Funds were the biggest investors in the anchor book, each buying shares worth Rs 74 crore.

Global names like Bay Pond, Ithan Creek Master Investors, Intergrated Core Strategies, Societe Generale, Ashoka India Equity Investment Trust, and BNP Paribas Financial Markets also participated in the anchor book.

The NBFC that provides loans to micro scale micro, small and medium enterprises (MSMEs) with small-ticket business loans with an average ticket size on disbursement of Rs 0.18 million to micro enterprises will utilise fresh issue proceeds for augmenting it capital base to meet future capital requirements arising out of growth of business and assets.

Should you buy, sell or hold?

Short-term investors looking for quick gains may consider exiting on any listing pop because limited premium expectations and NBFC sector sensitivity to credit cycles could lead to volatility, said Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

However, long-term investors may consider holding the stock as Aye Finance operates in a structurally high-growth MSME lending market with strong demand, the analyst added.

Aye Finance operates as a middle-layer NBFC focusing on small-ticket lending to micro and small MSMEs. Among its key strengths, Aye Finance benefits from a strong focus on the MSME segment, broad geographic diversification, and a technology-driven operating model that has helped improve cost efficiency, with the cost-to-income ratio moderating to the 50–52 percent range, said Khushi Mistry, Research Analyst at Bonanza.

The analyst explained that the company has also demonstrated faster AUM and branch expansion compared to several peers.

Master Capital Services said that outlook for NBFC-led MSME financing remains positive, supported by structural demand and deeper financial inclusion. “In this evolving landscape, Aye Finance Limited, as an NBFC-ML focused on MSME lending, is strategically positioned to capitalize on the sustained growth opportunity in the segment,” it said.

With its focus on small-ticket, secured, and semi-secured business loans, the company caters to underserved micro enterprises that remain largely outside the formal credit ecosystem, the domestic brokerage said. “Investors may consider the IPO as a potential long-term investment opportunity,” it added.

“Aye Finance’s IPO is happening at a time when investors at a macro level are showing interest in MSME lending. With its approach towards the underbanked micro-entrepreneurs and a tech-based credit assessment model, the company has created a unique niche. While most market sentiment is temporary and will determine the performance of the listing, the longer perspective will be determined by the company’s discipline towards asset quality, the length to which its lending model is scalable, and the manner in which the company manages credit cycles,” said Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara.

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