Buy Aye Finance; target of Rs 200: ICICI Securities

Moneycontrol • 9 days ago

Original source

Key Investment Pillars

  • Aye Finance's market positioning in the INR 0.15mn– 0.5mn ticket size segment is strong, driven by its differentiated underwriting models and execution capability.
  • The company's asset quality remains healthy despite headwinds, with a GNPA ratio of 4.20% and NNPA of 1.6%.
  • Aye Finance is expected to sustain profitability through superior execution, with a RoA of 4.04% and RoE of 13.1%.
  • The company's cost of borrowing is trending downwards, with a 20bps reduction to 10.6% in Q2FY27.

Thesis Validation Checklist

  • Investors should watch for Aye Finance's ability to maintain its asset quality and sustain profitability despite headwinds.
  • The company's disbursements growth and AUM expansion will be key indicators of its ability to execute on its business plan.
  • Aye Finance's operating leverage and cost discipline will be crucial in driving its RoA and RoE.
  • The company's expansion into new products, such as gold loans, will be an important factor in diversifying its revenue streams.