Summary
Bajaj Housing Finance Limited - Q3 FY 2026 Earnings Call Summary Monday, February 02, 2026, 6:15 p.m. IST
Event Participants
Executives 2 Atul Jain (Managing Director), Gaurav Kalani (Chief Financial Officer)
Analysts 7 Abhijit Tibrewal (Motilal Oswal), Abhishek (HSBC), Bobby Jay (Prunes Investments), Chirayu Maloo (Kotak Institutional Equities), Kunal Shah (Citigroup), Omkar Kamtekar (Ascendancy Capital), Shubhranshu Mishra (Phillip Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| AUM | ₹1.33 lakh crores | +23% YoY; growth driven by strong disbursements offset by higher attrition in prime segments. |
| Disbursements | ₹16,545 crores | +32% YoY; reflects strong momentum across SBUs, particularly in LRD and LAP. |
| GNPA | 0.27% | +1 bps QoQ; asset quality remains healthy and stable across the portfolio. |
| NNPA | 0.11% | -1 bps QoQ; improvement driven by steady collections and provisioning discipline. |
| NIM | 4.0% | Flat YoY/QoQ; held steady despite competitive pressure and yield moderation. |
| Cost of Funds | 7.3% | -50 bps YoY; benefit from policy rate transmission and lower incremental borrowing rates. |
| Spread | 1.8% | -12 bps QoQ; normalized from Q2 (1.9%) as delayed yield transmission caught up with lower CoF. |
| ROA (Annualized) | 2.3% | -10 bps YoY; stable sequentially at 2.3%. |
| ROE (Annualized) | 12.3% | +80 bps YoY; improvement driven by operating leverage and capital efficiency. |
| Tier-1 Capital | ~21.5% | -300 bps QoQ (estimated); decline due to conservative capital charge on undisbursed loan tranches. |
| PBC Ratio | 61.37% | Above regulatory threshold of 60%; managed via strategic loan assignments. |
Geographic & Segment Commentary
- Home Loans: AUM grew 18% YoY, comprising 54.5% of total mix; faced the highest competitive intensity and attrition (BT-out) from public sector banks.
- LRD & LAP: Lease Rental Discounting (LRD) grew 39% and Loan Against Property (LAP) grew 32% YoY; these segments saw a 40 bps increase in portfolio share this quarter.
- Sambhav Loans (SBU): Focuses on Near Prime (₹40-60L ticket size, 9-11% yield) and Affordable (₹15-35L ticket size, 11-13% yield) segments; currently at a ₹325-350 crore monthly disbursement run rate.
Company-Specific & Strategic Commentary
- Capital Conservatism: The company opted to provide capital for the entire undisbursed portion of under-construction loans (HL and CF) following the removal of a specific regulatory illustration, leading to a temporary Tier-1 dip.
- Operating Efficiency: Opex-to-NTI improved to 19% (excl. one-time items) from 19.8% YoY; management targets 14-15% over the next 3-4 years through AI and scale.
- Assignment Strategy: Strategic assignment of ₹3,470 crores in non-home loans was executed to maintain the Principal Business Criteria (PBC) above 60% while maximizing non-home loan growth.
- Sambhav SBU Expansion: Management plans to double the monthly disbursement run rate to ₹600+ crores in the next 12-15 months, focusing on the “formal” end of the affordable market.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | 24% - 26% (Medium Term) | Expected to return to this range as interest rates stabilize and attrition/BT-out pressure recedes. |
| NIM / NTI | 8-10 bps compression | Full-year FY26 impact expected to be lower than the initial 15-20 bps guidance due to strategic assignments. |
| Opex-to-NTI | 14% - 15% (3-4 years) | Driven by continued digitization and scaling of the Near Prime/Affordable SBUs. |
| Cost of Funds | -20 to 25 bps (FY27) | Anticipated reduction driven by repricing of maturing high-cost borrowings. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Attrition | Elevated BT-out rates (20% annualized) in the prime segment due to aggressive pricing by PSUs in a declining rate environment. |
| Regulatory Capital | Ambiguity regarding capital charges on undisbursed tranches of construction-linked loans could lead to faster capital consumption. |
| Yield Pressure | Incremental yields in the prime segment remain under pressure; expansion into affordable housing is the primary mitigation strategy. |
Q&A Highlights
Capital & Regulatory
- Question: Why did Tier-1 capital decline so sharply this quarter? (Abhishek)
- Answer: RBI consolidated guidelines removed an illustration for provisioning undisbursed tranches. On a conservative basis, capital is now provided for the entire undisbursed chunk of under-construction HL and CF (Atul Jain).
NIMs & Assignments
- Question: Will the reliance on assignments continue to be high to protect margins? (Kunal Shah)
- Answer: Assignments are driven by the need to maintain the PBC (Principal Business Criteria) above 60%. If non-home loans grow faster than home loans, the company will continue to assign non-home loans to stay compliant (Atul Jain).
Market Dynamics
- Question: How are you managing the high BT-out (balance transfer) pressure? (Shubhranshu Mishra)
- Answer: Total prepayment/BT-out is ~20%. About 40% of customers who apply for a BT-out are successfully retained through internal intervention (Atul Jain).
Sambhav SBU
- Question: What is the sourcing strategy for the affordable segment? (Raghav)
- Answer: 27-30% of acquisition is BT-in. The company has 900 front-end employees and is targeting the formal end of affordable housing to maintain high credit standards (Atul Jain/Pawan Bhansali).
Key Takeaway
Bajaj Housing Finance delivered a steady Q3 FY26 with AUM growing 23% YoY to ₹1.33 lakh crores and PAT increasing 21% to ₹665 crores. While the prime segment faced significant attrition (20% prepayment/BT-out rate) due to aggressive PSU competition in a declining rate cycle, the company successfully maintained NIMs at 4.0% through strategic assignments and improved Opex-to-NTI (19%). A notable strategic shift is the aggressive scaling of the ‘Sambhav’ SBU, targeting the doubling of Near Prime and Affordable disbursements to ₹600+ crores monthly within 15 months. Despite a temporary 300 bps Tier-1 capital hit due to conservative regulatory interpretations of undisbursed sanctions, the balance sheet remains robust with a 23.15% CAR and pristine asset quality (GNPA 0.27%). Management remains confident in returning to 24-26% medium-term growth as interest rates stabilize and the high-yield affordable portfolio scales.
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