Aye Finance posts muted bottomline growth in FY19 as provision costs rise

Aye Finance reported a mere 8.9% growth in net profits for the financial year 2018-19 to Rs 25 crore despite healthy growth in revenues as the NBFC (non banking finance company) was hit by higher provisions for bad loans.

The Gurugram-based company’s revenue improved nearly two times to Rs 217 crore on account of robust loan growth. As on March 31, 2019, unsecured advances mainly formed by business loans stood at Rs 988 crore. Provisions for standard, substandard, doubtful loans, and non-performing assets shot up to Rs 16 crore in FY19 from Rs 4 crore.

Gross NPAs increased to Rs 18.62 crore against Rs 7.72 crore in the previous year while net NPAs dropped to Rs 4.11 crore from Rs 4.99 crore on account of provisioning.

Besides provisions, Aye Finance faced higher finance costs at Rs 73 crore, up 150%.

Overall the NBFC sector continues to remain under stress after the fall of major players such as Infrastructure Leasing & Financial Services and Dewan Housing Finance. This has created space for fintech startups such as Incred Financial, RupeeCircle, Indifi Technologies, Lendingkart along with Aye Finance to come up with cost effective lending solutions.  

Aye Finance was founded in 2014 by Sanjay Sharma and Vikram Jaitley, former Ujjivan Financial Services executives. The NBFC provides working capital and business development loans to small and medium enterprises (SME) via a cluster-based approach. 

As of August 2019, the fintech claims to have disbursed over Rs 2,000 crore of loans to 125,000 customers

In August, the NBFC raised $10 million in debt funding from Swiss impact investor responsAbility Investments AG and $8 million in a securitisation transaction from DCB Bank.

So far, Aye Finance has raised $221 million through equity and debt issues.