Aye Finance Q4 FY26: PAT Surges 110%, AUM Grows 27% to INR7,044 Crores
Aye Finance concluded FY26 with strong Q4 results, posting a net profit of INR86 crores, up 110% YoY, on an AUM of INR7,044 crores. The company saw significant improvements in asset quality, with GNPA declining to 4.77% and collection efficiencies rising across key states. Following a successful IPO that bolstered capital adequacy to 42.2%, management has guided for 25-30% AUM growth in FY27, alongside an expected reduction in borrowing costs and an ROA target of 4-4.5%.
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aye finance has reported a robust financial performance for the fourth quarter of fiscal year 2026, concluding a defining year that included its initial public offering. The company posted a net profit of INR86 crores for the quarter, representing a 110% year-on-year growth and a 100% increase quarter-on-quarter. This performance was underpinned by disciplined underwriting and improved collection efficiencies, which have positively impacted asset quality metrics across the board.
Financial Performance and Growth Metrics
The lender ended the fiscal year with Assets Under Management (AUM) of INR7,044 crores. This figure reflects a healthy annual growth of 27% and a sequential increase of 6% in the fourth quarter. Disbursements showed strong momentum, reaching INR1,655 crores in Q4, a 26% rise sequentially. For the full year FY26, total disbursements amounted to INR5,169 crores, growing by 20% compared to the previous year.
Profitability for the full year improved, with net profit rising by 13% to INR194 crores. Total income for the year stood at INR1,796 crores, registering a 20% year-on-year growth. The Net Interest Margin (NIM) for FY26 was reported at 14.67%, while the NIM for Q4 expanded to 16.4%.
| Key Financial Metrics | Q4 FY26 | FY26 |
|---|---|---|
| Net Profit | INR86 crores | INR194 crores |
| AUM | INR7,044 crores | INR7,044 crores |
| Disbursements | INR1,655 crores | INR5,169 crores |
| Net Interest Margin | 16.4% | 14.67% |
| Total Income | - | INR1,796 crores |
Asset Quality and Collection Efficiency
A significant highlight of the quarter was the improvement in asset quality. The Gross Non-Performing Assets (GNPA) ratio declined to 4.77% in March 2026, down by 17 basis points from 4.94% in the previous quarter. The PAR 30+ ratio also improved to 6.9% from 7.6% in Q3 FY26. Credit costs reduced to 4.3% in Q4, a decrease of 37 basis points quarter-on-quarter, marking the fifth consecutive quarter of reduction in credit costs.
Collection metrics showed substantial strengthening. The non-overdue (non-OD) collection efficiency improved from 99.1% in October 2025 to 99.5% in March 2026. Key states including Bihar, Uttar Pradesh, and Rajasthan reported non-OD collection efficiencies exceeding 99.5%. Furthermore, collection efficiency in Bucket 1 improved by 107 basis points over a six-month period, moving from 51.8% in October 2025 to 62.5% in March 2026.
Liability Management and Cost of Funds
The company’s capital adequacy strengthened to 42.2% following the proceeds from its IPO, which raised INR1,010 crores in February 2026. The overall cost of borrowings moderated to 10.87% in Q4, with incremental borrowings for the quarter coming in lower at 10.13%. Management indicated that the replacement of high-cost debt maturing in the coming year with lower-rate debt is expected to reduce borrowing costs by approximately 25 to 35 basis points in FY27.
Strategic Outlook and Guidance
Looking ahead to FY27, Aye Finance has provided a positive outlook. The company targets AUM growth in the range of 25% to 30%. Credit costs are expected to normalize further, with guidance set between 3.5% and 4%. The operating expense ratio is projected to improve to a range of 8.25% to 8.75%, down from 9.6% in FY26, as the company leverages its investments in collection and mortgage infrastructure. Consequently, management aims to achieve a Return on Assets (ROA) of 4% to 4.5%.
On the product mix front, mortgage loans now comprise 23% of the portfolio, up from 12% two years ago. The company plans to increase this proportion to 30% to 35% over the next two to three years to enhance portfolio stability. The remaining balance will consist of hypothecation loans, split between secured and unsecured segments.
Historical Stock Returns for Aye Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +6.19% | +13.68% | +67.15% | +16.79% | +16.79% | +16.79% |
How might a potential credit rating upgrade from 'A stable' impact Aye Finance's ability to access institutional capital and compete with larger NBFC peers in the micro-MSME lending space?
Given the planned shift toward 30–35% mortgage loans over the next 2–3 years, how could this product mix evolution affect Aye Finance's risk-adjusted returns if property valuations in Tier 2 and Tier 3 towns face cyclical stress?
With gold loans and solar-based lending under evaluation for FY27 launch, which product would better align with Aye Finance's existing borrower base and branch infrastructure, and what regulatory considerations could shape that decision?
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