Bajaj Housing Finance’s March quarter results were led by healthy assets under management (AUM) growth, stable asset quality and better operating efficiency. Its AUM increased 23% to ₹1.4 lakh crore, while loan assets grew 24% to ₹1.23 lakh crore. Disbursements also increased 23% to ₹17,506 crore from the previous year. The company had disclosed these metrics as part of its business update for the March quarter.
Bajaj Housing Finance’s net interest income (NII) grew 15% to ₹945 crore, while net total income was up 20% at ₹1,141 crore, supported by higher fees and assignment income.
Its pre-provisional operating profit was up 23% to ₹921 crore from the previous year, while profit before tax increased 20% to ₹866 crore. The company’s profit after tax increased 14% to ₹669 crore, but excluding the one-time tax benefit in the fourth quarter of FY25, the normalised PAT growth was also at 20% from the previous year.
Bajaj Housing Finance’s margins softened during the quarter. Its net interest margin (NIM) declined to 3.8% from 4% sequentially and gross spread moderated to 1.7% from 1.8% in the previous quarter. This was mainly due to lower acquisition pricing and attrition of higher-yielding loans. However, the cost of funds improved sharply to 7.3% from 7.9% in the previous year.
The company’s gross non-performing assets (GNPA) were stable at 0.27% and net NPA at 0.11%. Its credit cost stood at 19 basis points, but the management said excluding the Stage-2 provisioning strengthening, it would have been around 10 basis points.
Management guidance
Bajaj Housing Finance’s management has guided for the margins in the first quarter of FY27 to remain broadly stable, but for the entire fiscal, some spread compression is likely as lower-yield new loans replace older high-yield loans.
It said the profitability in FY27 should still remain healthy because margin pressure is expected to be partly offset by better operating efficiency and lower credit costs. The return on assets is expected to remain within the medium-term guidance range of 2-2.2%, with bias towards the upper-end, it said.
Bajaj Housing Finance’s growth outlook remains strong. The management continues to target AUM growth between 21% to 23%, supported by prime housing, loan against property (LAP), lease rental discounting (LRD) and scale-up of Sambhav Housing.
For Sambhav Housing, the management remains on track to reach over ₹600 crore monthly disbursements over the next 12 months.
The key monitorables for FY27 will be NIM compression, funding cost movement, competitive intensity in home loans and continued asset quality stability.
Brokerage view
Brokerage firm HSBC has a “reduce” rating on Bajaj Housing Finance with a price target of ₹77 apiece, a 15.6% downside from its previous closing price.
It said the company continues to face pressure on yields, its ‘principal business criteria (PBC)’ is at its limit and incremental funding costs are high.
HSBC has cut its earnings per share (EPS) estimates by 1% for FY27 and 1.9% for FY28 to reflect pressure on spreads, offset by lower credit costs.
Industry headwinds remain intense, the brokerage added.
Of the 14 analysts who have coverage on the stock, six have a ‘buy’ rating, three have a ‘hold’ rating, five have a ‘sell’ rating.
Stock performance
Shares of Bajaj Housing Finance were trading 0.2% up ₹91.25 apiece at 9.40 am on Tuesday. The stock has gained 24.9% in the past month but is down 5.1% this year, so far.
Also Read: This stock is Motilal Oswal’s top mid-sized private banking pick; check upside potential