Aye Finance Limited announced its unaudited financial results for Q3FY26 ended December 31, 2025, showcasing exceptional growth across key performance metrics. The leading NBFC specializing in micro-enterprise lending demonstrated strong momentum following its recent successful IPO, with robust year-over-year expansion driven by deep penetration into India's underserved MSME segment.

Strong Financial Performance

The company delivered impressive profitability growth with Profit After Tax surging 87.1% year-over-year to ₹43 crore from ₹23 crore in Q3FY25. This strong performance resulted in Return on Assets of 2.40% and Return on Equity of 9.74%, reflecting enhanced operational efficiency and strategic execution.

Business Growth and Expansion

Aye Finance demonstrated strong business momentum with Assets Under Management growing 23.5% year-over-year to ₹6,356 crore from ₹5,145 crore. Disbursements showed robust growth of 35% YoY, increasing to ₹1,310 crore from ₹973 crore, indicating strong market demand and effective business execution. The company added 41,015 new borrowers during Q3FY26.

Asset Quality and Credit Management

The company maintained disciplined credit management with Gross NPA at 4.94% and achieved four consecutive quarters of credit cost reduction. Credit cost stood at 4.67% in Q3FY26, demonstrating improved underwriting standards and risk management capabilities. The company reported improving collection efficiencies across DPD buckets throughout FY26.

Product Portfolio and Strategic Focus

Aye Finance operates a diversified product portfolio serving micro-scale MSMEs across various business clusters. The mortgage loans segment showed significant growth, increasing its concentration from 11.5% to 20.9% in Q3FY26. The company's repeat business program ensures retention of quality customers with low origination cost, with repeat percentage in hypothecation loan AUM reaching 53.6%.

Nine-Month Performance and Earnings Call

For the nine months ended December 31, 2025, total income increased 18.54% year-over-year to ₹1,282 crore, with Profit After Tax reaching ₹108 crore. The company maintains a three-year vision targeting 28%-33% CAGR growth, credit cost of 3.25%-3.75%, and Return on Assets of 4%-4.5%.

The Board approved these results at their meeting held on March 6, 2026. Following the results announcement, Aye Finance conducted an earnings conference call on March 6, 2026, from 4:00 P.M. to 4:53 P.M. (IST). The audio recording of the earnings call has been made available on the company's website at https://www.ayefin.com/disclosures/material-events-disclosures as per SEBI regulations.

The company's equity shares were listed on NSE and BSE on February 16, 2026, following its successful IPO that raised net proceeds of ₹672 crore. Aye Finance maintains strong credit ratings of A (Stable) from both ICRA and India Ratings, operating across 18 states and 3 union territories through its 571-branch network.

Aye Finance Limited has successfully completed a pilot program that leverages Generative AI technology for image-based underwriting of trading businesses, marking a significant advancement in micro-enterprise lending. The innovation targets the underserved micro-scale MSME segment in tier 2 and beyond cities, addressing traditional barriers to formal credit access.

Technology Innovation and Implementation

The cutting-edge solution, developed in-house, represents a breakthrough in financial technology application. The system utilizes advanced technological components to transform unstructured data into actionable financial insights:

The system specifically targets garment stores and grocery stores, using store images as primary input to generate reliable monthly sales estimates. This approach significantly reduces the "cost-to-serve" for the micro-enterprise segment while maintaining high levels of accuracy and consistency.

Company Background and AI Journey

Aye Finance's technological advancement builds on a strong foundation of innovation and investment. The company achieved a notable milestone as the first NBFC to receive equity investment from Google Capital in 2018. Subsequently, it established its Data Science and Artificial Intelligence Unit in 2019, successfully deploying multiple customized ML models across key processes throughout the customer lifecycle.

This systematic approach to technology integration has enabled the optimization of unit economics while facilitating the inclusion of a larger population of grassroots businesses in the formal credit ecosystem.

Operational Impact and Benefits

The newly developed system addresses critical challenges in the micro-enterprise lending sector. By transforming store images into financial insights, the solution provides several operational advantages:

• Standardization: Reduces reliance on subjective individual judgment
• Speed: Enables unprecedented application processing speed
• Consistency: Ensures uniform underwriting standards across applications
• Scalability: Opens possibilities for extension to other sectors beyond trading

The system is built on Aye Finance's extensive internal datasets and has undergone rigorous testing for consistency, ensuring reliability in real-world applications.

Leadership Perspective and Market Context

"Our leadership in lending to the underserved segment of micro MSMEs has been rooted in superior operational efficiency," said Mr Sanjay Sharma, Managing Director, Aye Finance Ltd. "This GenAI integration builds on our established efficiency. By automating income estimation through Generative AI, we will substantially reduce manual fieldwork with an accelerated, data-driven system that increases both the speed and the reliability of our credit decisions."

The innovation addresses a fundamental challenge facing 60 million micro-entrepreneurs in India's Tier 2 cities and beyond, where the lack of formal accounting records and "paper trails" has traditionally created barriers to credit access. As a Middle-Layer Non-Banking Financial Company (NBFC-ML), Aye Finance has been successfully addressing these credit challenges since 2014, offering tailored working capital and expansion loans typically secured against working assets or property.

Recent Financial Developments

The company recently strengthened its financial position through a successful Initial Public Offering, raising INR 1,010 crores. This capital infusion further enhances the company's ability to expand its technology-driven lending solutions and reach a broader segment of underserved micro-enterprises across India's growing tier 2 and beyond markets.