Aye Finance Limited

Financial Services — Credit Services · NSE

₹152.30−₹7.59 (−4.75%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Aye Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Aye Finance Limited, a non-banking financial company, provides loans to micro, small, and medium enterprises in India.

IndustryCredit Services

SectorFinancial Services

Employees10,346

Annual revenue₹1,608 Cr

How does it make money?

Turns over ₹1,608 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹37 left at the operating level before interest, tax and depreciation. Each of its 10,346 employees supports ₹15.5 lakh of revenue a year, the signature of a people-led business.

EBITDA margin36.8%

Net margin12.0%

Revenue / employee₹15.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

BAJAJ FINANCE LIMITEDP/E 30.2x · ROE 17.8%

STATE BANK OF INDIAP/E 10.3x · ROE 15.2%

HDFC BANK LTDP/E 15.9x · ROE 13.8%

ICICI BANK LTD.P/E 18.1x · ROE 16.5%

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

ROCE7.8%

ROE7.6%

Peer median ROE16.5%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 23.0% and earnings to grow about 36.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+23.0%

Est. earnings growth+36.0%

Analysts3

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +177% while net margin moved +75% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+177%

Margin effect+75%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

78/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

68/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

15.3x

Sector Median

17.0x

median of 4 sector peers

🟡Against its sector it is priced broadly in line with the peer median of 17.0x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Fair

17.0x median of 4 peers · -10%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

15.3x

P/B

1.33x

EV/EBITDA

13.8x

PEG

0.22

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Margins are compressing
EBITDA margin has slipped from 42.0% to 36.8% over 3 years.
Return on capital is falling
ROCE has declined from 10.9% to 7.8% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 high

🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.1 points, from 42.0% to 36.8%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 42.0% to 36.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 30% a year✓ 40.4% CAGR
Latest reported year was 36.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 35%✓ 36.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✗ 7.6%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Interest cover stays above 3x✗ 2.6x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹3,725 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

15.3x

Fair

Fairly valued against the generic band

P/B Ratio

1.33x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹9.95

Profitable

Profitable on a per-share basis

ROE

7.6%

Weak

Weak capital efficiency

ROCE

7.8%

Weak

Low return on total capital employed

Debt/Equity

2.00x

High

High leverage

Revenue Growth (YoY)

36.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

91.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹1,366 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹152.3

P/E (Forward)

7.8x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

35.0%

Good

Healthy core-business profitability

Net Margin

22.2%

Good

Strong bottom-line conversion

Current Ratio

1.53

Comfortable

Healthy short-term liquidity

52W Range Position

59%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

166.4 / 172.3

Bearish alignment (short < long)

RSI (14)

36.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹581 Cr	₹980 Cr	₹1,357 Cr	₹1,608 Cr	+40.4%
EBITDA	₹244 Cr	₹455 Cr	₹613 Cr	₹593 Cr	+34.4%
EBITDA Margin	42.0%	46.5%	45.2%	36.8%	—
PAT (Net Profit)	₹40 Cr	₹172 Cr	₹171 Cr	₹194 Cr	+69.3%
EPS	₹1.62	₹6.96	₹6.94	₹9.6	+81.1%
ROE	5.3%	13.9%	10.3%	7.6%	—
ROCE	10.9%	12.7%	9.5%	7.8%	—
Total Debt	₹2,320 Cr	₹3,523 Cr	₹4,555 Cr	₹5,065 Cr	+29.7%
Free Cash Flow	-₹725 Cr	-₹1,334 Cr	-₹829 Cr	-₹1,366 Cr	—

🟢 Revenue has grown at 40.4% a year over 3 years.

🟢 EBITDA has grown at 34.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 42.0% to 36.8% over 3 years (-5.1 pts).

🟢 PAT (Net Profit) has grown at 69.3% a year over 3 years.

🟢 EPS has grown at 81.1% a year over 3 years.

🟢 ROE has risen from 5.3% to 7.6% over 3 years (+2.4 pts).

🔴 ROCE has fallen from 10.9% to 7.8% over 3 years (-3.1 pts).

🔴 Total Debt has grown at 29.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹7,773 Cr

Total Liabilities

₹5,240 Cr

Total Debt

₹5,065 Cr

Cash & Equivalents

₹620 Cr

Operating Cash Flow

-₹1,355 Cr

Capex

-₹12 Cr

Shareholding (proxy)

Institutional Holding

47.3%

Insider Holding

35.2%

Analyst Consensus

Recommendations

4 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹233

+53.0% vs CMP

Target Range

₹197 – ₹285

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

3 mixed3 general

Up 50% in 6 months! Small-cap stock Aye Finance rises today despite weak market - Q2 business update, share price return

TradingView, 12 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Aye Finance Share Price Up 50% in 6 Months: Q2 Update

Univest, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Compare OASIS SECURITIES with

Equitymaster, 16 Oct

Aye Finance Ltd | Stock Share Price Live

MarketSmith India, 28 Apr

Aye Finance shares jump 15% to hit record high; check what's driving gains

Business Standard, 21 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Aye Finance Insider Buyers Net ₹4.0m Despite 11% Stock Decline

Simply Wall Street, 28 Sept

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong13.9/20

🟢Financial HealthStrong17/20

🟢GrowthStrong18.5/20

🟡ProfitabilityModerate8.9/15

🟢ValuationAttractive11.3/15

🔴RiskHigh2.5/10

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 30% a year40.4% CAGR
✓EBITDA margin holds above 35%36.8%
✗Return on equity stays above 8%7.6%
✗Interest cover stays above 3x2.6x