Credit Rating- Revision

AYE FINANCE LIMITED (formerly known as AYE FINANCE PRIVATE LIMITED) CIN: L65921DL1993PLC283660 June 24, 2026 BSE Limited, National Stock Exchange of India Limited, Phiroze Jeejeebhoy Towers, Exchange Plaza, C-1, Block G, Dalal Street, Bandra Kurla Complex, Bandra (E), Mumbai – 400001 Mumbai – 400051 Scrip Code: 544699 Symbol: AYE Sub.: Intimation for upgradation in Credit Rating of the Company under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) Dear Sir/Ma’am, Pursuant to Regulations 30 & 51 read with Schedule III of SEBI Listing Regulations, we wish to inform that India Ratings and Research (Ind-Ra) vide its letter dated June 23, 2026 has upgraded the rating for various instruments of the Company as detailed below: Sr. Instrument Type Size of Issue Previous Rating Revised Rating Rating Action No. (million) with Outlook 1. Non-Convertible INR 12,963.09 IND A/ Stable IND A+/ Stable Debentures (reduced from INR 19,249.81) Upgraded 2. Commercial Papers INR 500 IND A1 IND A1+ 3. Bank Loan Facilities INR 13,000 IND A/Stable IND A+/Stable Copy of the aforesaid letter received from India Ratings and Research (Ind-Ra) is enclosed herewith. The above is for your information, records and dissemination. Thanking you. Yours faithfully, For Aye Finance Limited (formerly known as Aye Finance Private Limited) (Gaurav Seth) Chief Financial Officer Corp. Office: Unit No. -701-711, 7th Floor, Unitech Commercial Tower-2, Sector-45, Arya Samaj Road, Gurugram – 122003, Haryana, India Registered Office: M-5, Magnum House-I, Community Centre, Karampura, West Delhi, New Delhi -110015, India Ph: 0124-4844000; e-mail: corporate@ayefin.com; website: www.ayefin.com India Ratings Upgrades Aye Finance & its NCDs & Bank Loan Facilities to ‘IND A+’/Stable and CP to ‘IND A1+’ Jun 23, 2026 | Aye Finance Limited (formerly Aye Finance Private Limited) | Non Banking Financial Company (NBFC) India Ratings and Research (Ind-Ra) has upgraded Aye Finance Limited (Aye) and its long-term debt instruments’ rating to ‘IND A+’ with a Stable Outlook from ‘IND A’, and commercial paper (CP) rating to ‘IND A1+’ from ‘IND A1’. The instrument-wise rating actions are as follows: Details of Instruments Instrument Date of Coupon Maturity Rating Assigned with Rating Size of Issue (million) Type Issuance Rate Date Outlook/Watch Action Non-convertible INR12,963.09 (reduced - - - IND A+/Stable Upgraded debentures# from INR19,249.81) Up to 365 Commercial paper - - INR500 IND A1+ Upgraded days Issuer rating - - - - IND A+/Stable Upgraded Bank loan - - - INR13,000 IND A+/Stable Upgraded facilities # Details in Annexure Analytical Approach Ind-Ra continues to take a standalone view of Aye to arrive at the ratings. Detailed Rationale of the Rating Action The upgrade reflects Aye’s improved capitalisation due to an equity raise in FY26 through an initial public offering, improved secured mix in the loan portfolio, a seasoned hypothecation loan book, improved profitability buffers, and a diversified funding profile. The ratings also factor in Aye’s sizeable unsecured book and higher operating expenses due to high customer-touch business model than its peers, and managed but elevated credit cost, particularly while managing hypothecation loans. The CP rating reflects Aye’s improved profitability and capitalisation, along with adequate liquidity in FY26. The company has cash surplus in all-time buckets and Ind-Ra notes that the company has reasonable liquidity to overcome a stress situation. List of Key Rating Drivers Strengths - Strengthening loan book through focused expansion of mortgage product - Improved capitalisation provides headroom for further scaling of franchise - Improving profitability with rise in scale to drive operating leverage benefits - Improving funding diversification - Established information technology (IT) systems and processes Weaknesses - Elevated credit costs due to hypothecation portfolio volatility Detailed Description of Key Rating Drivers Strengthening Loan Book through Focused Expansion of Mortgage Product: Aye uses the cluster- based credit underwriting approach to lend to micro-enterprises, largely in the manufacturing, trading, dairy (livestock), and services segments, with modest credit profiles (turnover of INR1 million-10 million) for their working capital requirements and business expansion. These loans are covered by either immovable property or hypothecation of the working assets of borrowers. In terms of industry segments, the portfolio was split among trading (53%), livestock rearing (25.3%), manufacturing (10.7%), services (8.5%), job work (1.8%) and the rest other at end-March 2026. Aye focuses on evaluating borrower cash flows across both hypothecation and mortgage loan products, with emphasis on the borrower’s business vintage and stability of cash flows while assessing repayment capacity, rather than relying primarily on collateral or receivables. The company has also strategically not increased its exposure to the services segment, which has supported overall asset quality, considering the higher sensitivity of such borrowers to macroeconomic volatility. Aye has reduced the overall share of livestock to 25.3% at FY26 from 33.1% of the total assets under management (AUM) in FY24, due to asset quality pressures seen across the industry. Aye’s product portfolio comprises hypothecation loans, mortgage loans, and quasi-mortgage loans. Hypothecation loans formed 76.8% of the overall AUM at end-March 2026, followed by mortgage loans (21.6%) and quasi- mortgage loans (1.6%). Aye classified around 60% of the overall portfolio as secured in FY26 (FY25: 57.3%; FY24: 59.9%), considering mortgage and hypothecation of underlying inventory and receivables, while the remaining as unsecured at FYE26. Unsecured loans are hypothecated loans with loan-to-value exceeding 100%, where the value of sanction is higher than inventory valuation at the point of disbursement. Aye has conservatively classified the entire loan as unsecured. The share of mortgage loans in the overall portfolio nearly tripled in FY26 over FY24. The company’s AUM stood at INR70.44 billion at FYE26 (FYE25: INR55.25 billion; FYE24: INR44.7 billion). The largest part (88%) of the portfolio had a ticket size of less than INR0.4 million in March 2026, with an average ticket size of about INR0.13 million. Geographically, the portfolio is well diversified, with the top three states – Bihar (16.6%), Uttar Pradesh (15.6%), and Rajasthan (11.4%) - accounting for 43.6% of the combined exposure, with the remaining spread across 18 states. The company had a network of 571 branches at FYE26. Improved Capitalisation Provides Headroom for Further Scaling of Franchise: With the company raising capital worth INR7.1 billion during FY26 (FY25: INR2.5 billion; FY24: INR3.1 billion), the tangible net worth (net of deferred tax assets and intangible assets) improved to INR24.75 billion (INR15.91 billion; INR11.88 billion). The company got listed on the BSE Ltd and National Stock Exchange of India Limited on 16 February 2026 through an initial public offering consisting of a fresh issue of INR7.1 billion and an offer for sale of INR3 billion. The company’s improved capital levels provide it with headroom for loan growth and scaling of franchise. Moreover, the company’s capitalisation levels are adequate to meet its medium-term growth objectives, while maintaining the leverage (debt/equity) below 4.0x (FY26: 2.03x; FY25: 2.8x; FY24: 2.9x). As per Ind- while maintaining the leverage (debt/equity) below 4.0x (FY26: 2.03x; FY25: 2.8x; FY24: 2.9x). As per Ind- Ra’s stress test, the capital buffers will remain adequate to absorb asset quality pressures in the near-to- medium term. The company’s ability to generate adequate internal accruals continues to support its capital structure, enabling it to maintain a moderate leverage position. Improving Profitability Buffers with Rise in Scale to [Showing first 8,000 characters — download PDF for full document]