Aye Finance IPO opened on February 09. The bidding closes on February 11, and the company aims to raise Rs 1,010 crore. The issue is a combination of 5.50 crore fresh shares aggregating to Rs 710 crores and an offer for sale of 2.33 crore shares amounting to Rs 300 crores. The company has set the price band between Rs 122 and Rs 129 per equity share.
Aye Finance IPO: GMP
The shares of Aye Finance were trading at nil in the grey market. It has been on a downward trend for the past one week, showing little to no investor interest in the stock.
However, investors should be aware that the GMP is an unofficial measure of investment sentiment, and the actual listing price could be significantly different.
Aye Finance IPO: Allotment and listing
The allotment for the Aye Finance IPO is expected to be finalised on February 12, while the listing on the exchanges, BSE and NSE, is likely to be on February 16, as per the tentative schedule.
Aye Finance IPO: Lot size
A retail applicant needs to apply for a minimum of one lot that contains 116 shares, requiring a minimal investment of Rs 14,964. The lot size investment for a small NII is 14 lots of 1,624 shares, aggregating to Rs 2.09 lakh, and for a big NII, it is 67 lots of 7,772 shares, totalling to Rs 10.02 lakh.
Book runner and registrar
Axis Capital is the book-running lead manager of the IPO, and Kfin Technologies is the registrar of the issue.
Aye Finance IPO: Expert take
Most market observers have raised concerns about the returns. The operating model is strained with high people churn, which can be seen at 65% attrition (FY25 and similar). That, most analysts believe, is a red flag. Especially, “in a people-heavy underwriting/collections business. High churn often translates to weaker credit discipline, higher opex and more fraud/operational drift risk,” said, said Deven Choksey Research in an IPO note.
Also, they pointed out that there is a funding disadvantage for the company compared to its peers due to the weaker credit rating.
The company at the upper price band of Rs 129 implies a market cap of 3,184 crore, which translates to a 1.3x Adj P/B ratio. This valuation is at a 20-30% discount to listed peers, which “we believe is justified given the above mentioned reasons. We believe the IPO appears fully priced in,” said Deven Choksey Research.
About Aye Finance
Aye Finance is an NBFC that offers secured and unsecured small business loans for working capital, including mortgage loans, ‘Saral’ Property Loans, secured and unsecured hypothecation loans, primarily to micro-scale MSMEs.
Founded in 1993, the company offers business loans for business expansion, secured by working assets or property, to customers in manufacturing, trading, service, and allied agriculture sectors.
The company is serving 586,825 active customers across 18 states and three union territories with significant assets under management.