Concall Note / NBFC / AYE

AYE Finance tightened underwriting this quarter. Last quarter it said it would relax it.

Approval rate shrunk to 45% from a planned reopening toward 55%, even as PAT jumped 144% and gross NPA improved to 4.5%.

AYE ISIN INE501X01029 23 Jul 2026 Analysis source: Tijori Concall Monitor

Management consistency flag

In March 2026, AYE Finance management said approval rates would reopen from 40-43% toward 55% in the coming year, adding 8-10% growth. In July 2026, management said the approval rate had shrunk to 45% and that it was keeping the policy tight, without explaining why the previously expected reopening was abandoned.

What's new

Q1 PAT jumped 144% YoY to ₹75 crores on AUM growth of 28% to ₹7,324 crores.
Gross NPA improved for the fourth consecutive quarter to 4.5% from 4.6% a year ago.
Credit cost declined 29 bps QoQ to 4.0%, with management calling the improvement structural.
Disbursements at ₹1,219 crores were the strongest first-quarter ever, up 22% YoY.

Themes from the call

Demand

Disbursements hit a Q1 record of ₹1,219 crores, with 44,000 new borrowers added, despite tighter underwriting.

Margins

NIM expanded 20 bps QoQ to 15.9% as lower borrowing costs offset mortgage mix dilution.

Asset quality

Gross NPA fell to 4.5%, PAR X at 7.0% is deemed sufficient for the FY27 credit cost guide, but mortgage PAR 90 missed the prior target of 2-2.5%.

Guidance watch

FY27 AUM growth guided at 25-30% with 40-50 new branches.
FY27 credit cost guided at 3.5-4.0%, with a tighter range expected by H1 end.
FY27 NIM guided at 14.3-14.8%, broadly flat as lower funding cost offsets mortgage mix.

Risk flags

Underwriting approval rate reversal from a planned reopening to further tightening, with no explanation.
PAR X target relaxed from below 6% to 6-6.5% while current is 7.01%.
Mortgage PAR 90 at 3% versus prior expectation of decline to 2-2.5% in 3-4 months.
New product launches (gold loans, solar) still under survey, no launch timing provided.

Key quotes

"As we start opening up and coming back to the 55% approval rate automatically the growth of 8% or 9%-10% will get added."
— AYE Finance management, Mar 2026 call
"That has shrunk to 45% and we have kept that policy tight."
— AYE Finance management, Jul 2026 call

The brief

AYE Finance delivered a quarter that, on the surface, confirms the inflection management has been promising. PAT surged 144% to ₹75 crores, AUM grew 28% to ₹7,324 crores, and gross NPA improved for the fourth straight quarter to 4.5%. Disbursements hit a Q1 record of ₹1,219 crores. But the numbers are contradicted by movements in the underlying levers. Six months ago, management told investors approval rates would reopen from roughly 40-43% toward 55%, adding 8-10% growth. This quarter, the approval rate had shrunk to 45%—and management said it was keeping policy tight, offering no explanation for the reversal. The PAR X target was relaxed from below 6% to 6-6.5%, while mortgage PAR 90 came in at 3% versus a prior expectation of 2-2.5% within three to four months. New product launches like gold loans and solar remain under survey, with no launch timing. The strong Q1 is real—credit cost fell 29 bps to 4.0%, NIM expanded 20 bps to 15.9%, and funding costs are set to decline further after a rating upgrade to IND A+. But the underwriting reversal is the kind of pivot that, left unexplained, makes every other forward-looking statement harder to trust. The inflection is visible, but the signal from management is muddled.

The take

AYE Finance delivered a strong quarter, but the underwriting reversal without explanation undermines faith in management's forward guidance.

Source Tijori Concall Monitor analysis This brief is derived from Tijori's call-monitor analysis, not the exchange transcript source of record. Verify material claims against the company's call materials where available.