Bajaj Housing

Bajaj Housing Finance reported a strong Q4 FY26, with Assets Under Management (AUM) growing 23% year-on-year, surpassing INR140,000 crores. Profit Before Tax (PBT) increased by 20%, and normalized Profit After Tax (PAT) also grew by 20% YoY, excluding a one-time^📎 tax benefit of approximately INR34 crores in Q4 FY25. Operating efficiency showed significant improvement, with the Opex to Net Total Income (NTI) ratio reducing to 19.2% in Q4 FY26 from 21.8% in Q4 FY25.

The company's AUM growth for the year was at the higher end of its assessment range, reaching 23%. Disbursements on a year-on-year basis grew 23% from INR14,250 crores in Q4 FY25 to INR17,506 crores in Q4 FY26. The portfolio remains well-diversified, with home loans constituting 54.1% of AUM, Loan Against Property (LAP) at 10.8%, Lease Rental Discounting (LRD) at 22.4%, and Developer Finance (DF) at 11.5%.

Net Interest Margin (NIM) experienced a sequential compression, dropping by 12 basis points from 4% in Q3 FY26 to 3.8% in Q4 FY26. This was primarily driven by a 14 bps reduction in portfolio yield due to lower acquisition pricing and portfolio attrition, partially offset by a 4 bps benefit from reduced cost of funds. The year-on-year cost of funds moderated by 60 bps to 7.3% in Q4 FY26 from 7.9% in Q4 FY25.

Asset quality remained stable and healthy, with Gross Non-Performing Assets (GNPA) at 27 bps and Net Non-Performing Assets (NNPA) at 11 bps. The annualized credit cost for the quarter was 19 bps, an increase from 11 bps in Q4 FY25. Management clarified that this increase was a prudential strengthening of provisioning coverage on Stage 2 assets, undertaken due to the current macro environment, and not indicative of micro-level stress or rising early delinquencies within the portfolio.

The Sambhav housing initiative, which focuses on the near prime and affordable segments, has grown its AUM to approximately INR9,000 crores. Monthly disbursements for this segment are currently in the range of INR410-425 crores, with a target to achieve INR600 crores plus monthly disbursements over the next 12 months. The business operates across 73 locations, primarily serving salaried customers with an average ticket size of INR28 lakhs and a high CIBIL score of greater than 750 for 65% of customers.

The prime housing market continues to exhibit high competitive intensity, with leading banks like SBI and HDFC setting the pricing benchmarks. Management views this competitive environment as a structural 'feature, not a novelty.' While Q1 FY27 may see slight yield compression and marginal cost of funds benefit, the overall FY27 outlook for ROA is expected to be at the upper end of the 2-2.2% medium-term guidance, contingent on policy rate stability and normalization of money market rates.