Aye Finance Shares Fall 25 Percent in a Month While Brokerage Predicts 50 Percent Upside

Aye Finance shares ended higher on Friday after dropping about 12 percent over the week, even as ICICI Securities predicts a potential 50 percent rally in the non-banking financial company stock. The Gurugram-based lender saw its share price fall 14.54 percent in two weeks and 25.56 percent over a month, closing at ₹134.55 per share on the BSE with a market capitalisation of ₹3,320.53 crore on Friday, October 23. Its return on equity stands at 10.75 percent.

Growth Outlook

ICICI Securities kept a Buy rating on Aye Finance following its second-quarter earnings report for fiscal year 2026-27, pointing to strong market positioning, execution skills, and resilient asset quality. The brokerage noted that the lender operates well in the ₹0.15 million to ₹0.5 million ticket size segment. The company uses cluster and artificial intelligence-machine learning underwriting models to handle macroeconomic challenges. During the rising interest rate cycle, the lender's cost of borrowing dropped by 20 basis points to 10.6 percent, with incremental costs dropping further to 10 percent in the second quarter.

Target Price

Even with a positive long-term view, ICICI Securities lowered its target price for the stock to ₹200 from ₹285 per share. The brokerage reduced its valuation multiple to 1.4 times the estimated financial year 2028 book value per share, down from 2 times previously, to account for near-term market volatility.

Context

Non-banking financial companies lend money and provide financial services like traditional banks without holding a full banking license. Brokerage firms routinely issue target prices and stock ratings to help investors gauge potential future performance based on company fundamentals and market conditions.