Aye Finance, one of India’s leading lenders focused on micro, small, and medium enterprises (MSMEs), delivered an impressive financial performance in the fourth quarter of FY26. The non-banking financial company (NBFC) reported a sharp rise in profitability, supported by strong loan growth, improved asset quality, and disciplined cost management.

Profit Jumps Over 100% in Q4

Aye Finance posted a net profit of ₹85.9 crore in Q4 FY26, marking a remarkable 111% increase from ₹40.7 crore in the corresponding quarter last year. On a sequential basis, profit also more than doubled, rising 102% from ₹42.6 crore in Q3 FY26.

This significant jump reflects the company’s ability to scale efficiently while maintaining healthy margins. It also highlights the growing demand for formal credit among underserved micro-enterprises across India.

Revenue Growth Driven by Strong Core Operations

Operating revenue for the quarter rose 29% year-on-year to ₹528.4 crore, compared to the same period last year. On a quarter-on-quarter basis, revenue increased 19%, underlining sustained business momentum.

A major contributor to this growth was interest income, which climbed 26% year-on-year to ₹440.2 crore. This indicates robust expansion in the company’s lending portfolio and continued traction in its MSME loan offerings.

Additionally, net gains from fair value changes surged sixfold to ₹48 crore, providing a substantial boost to overall earnings. The company also recorded a gain of ₹20 crore from the derecognition of financial instruments, although this was 42% lower than the corresponding quarter in the previous year.

Including other income of ₹16.8 crore, Aye Finance’s total income for Q4 FY26 stood at ₹545.3 crore.

Improving Asset Quality and Lower Credit Costs

One of the most encouraging aspects of Aye Finance’s performance was the continued improvement in asset quality. Total expenses rose 18% year-on-year to ₹434.4 crore, a relatively moderate increase compared to revenue growth.

More importantly, the company reported a 186 basis point reduction in credit costs, bringing them down to 4.3% for the quarter. This improvement follows consistent declines over the previous five quarters and reflects stronger underwriting standards, better collections, and improved borrower quality.

For an MSME-focused lender, effective credit risk management is critical. Aye Finance’s ability to reduce credit costs while expanding its loan book demonstrates operational maturity and resilience.

Strong Full-Year FY26 Performance

For the full financial year FY26, Aye Finance reported a profit after tax (PAT) of ₹193.6 crore, up 13% from ₹171.3 crore in FY25.

Operating revenue for the year grew 24% year-on-year to ₹1,814.7 crore. This consistent annual growth underscores the company’s strong market positioning in India’s expanding MSME lending segment.

Loan Book and Customer Base Continue to Expand

Aye Finance’s assets under management (AUM) increased 27% year-on-year to ₹7,044 crore, reflecting healthy portfolio expansion. Quarterly disbursements also rose 25% compared to the same quarter last year.

During the quarter, the company added 70,841 new borrowers, further strengthening its presence in the underserved MSME credit market. This customer acquisition momentum demonstrates the vast and growing demand for accessible financing solutions among small businesses.

Founded in 2014, Aye Finance specializes in providing business loans to micro-enterprises across 18 states and three union territories. Its product portfolio includes small-ticket hypothecation loans with an average ticket size of ₹1.5 lakh, as well as mortgage-backed loans averaging ₹5 lakh.

Market Responds Positively

Investor sentiment remained upbeat following the earnings announcement. Shares of Aye Finance surged 13.15%, trading at ₹152.45 on the BSE at 2:20 PM IST.

The sharp rise in the stock price reflects market confidence in the company’s growth strategy, improving profitability, and strengthening asset quality.

Outlook

Aye Finance’s Q4 FY26 results highlight the strength of its business model and its deep understanding of India’s underserved MSME sector. With improving credit metrics, rising disbursements, and a growing customer base, the company appears well-positioned for sustained growth.

As formal credit penetration among micro-enterprises continues to expand, Aye Finance is likely to remain a key beneficiary of this long-term structural opportunity. Its latest results reinforce its position as a significant player in India’s MSME lending ecosystem.