Bajaj Housing Finance FY25 Annual Earnings Summary
3 quarters covered · ₹22,26,93,00,000 Cr revenue · ₹5,45,60,01,135 Cr PAT · 0.0% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY25Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY25Risks flagged during the year
Competition remains very intense in the prime home loan segment, which could pressure growth and spreads.
Q2 FY25 · mediumAnalyst raised concern about historical patchy asset quality in developer finance during downturns; management defended granular underwriting but acknowledged risk.
Q2 FY25 · mediumRetail disbursements grew only 7% YoY in Q2, raising concerns about future AUM growth trajectory as base expands.
Q3 FY25 · mediumA potential slowdown in residential real estate sales could impact developer finance book growth and asset quality.
Q3 FY25 · mediumIntense competition in mortgage lending may compress net interest margins and spreads, affecting profitability.
Q3 FY25 · mediumThe new near-prime and affordable housing segment carries higher origination costs and credit risk, which may not materialize as expected.
Q4 FY25 · mediumPSU banks have become more aggressive post repo rate cuts, and private banks were aggressive in March, potentially pressuring yields and market share.
Q4 FY25 · mediumManagement acknowledged 10-15 bps NIM compression in FY26 due to repo rate cuts, with yield pass-through (45-50 bps) exceeding cost pass-through (34-35 bps).
Q4 FY25 · mediumWith long-tenor home loans (behavioral maturity 6-8 years) funded by shorter-term liabilities (average 3-5 years), ALM risk requires active management.
Q2 FY25 · lowManagement refrained from providing specific forward-looking guidance due to IPO-related silent period, creating uncertainty for investors.
Q3 FY25 · lowChanges in regulatory requirements, such as the 50% individual home loan norm, could constrain business mix or increase compliance costs.
Q4 FY25 · lowRBI's proposed removal of exit penalties on floating rate loans could increase balance transfers in the LAP segment, though management expects limited material impact.
What changed through the year
Q2 FY25 · Retail disbursements to pick up with affordable/near-prime segment
Management expects retail disbursement growth to accelerate as the affordable and near-prime verticals start delivering, offsetting the current 7% YoY growth in retail disbursements.
Q2 FY25 · Credit cost to remain in 14-17 bps range
Normalized credit cost (excluding overlay releases) is expected to stay in the 14-17 bps band, as overlay is nearly exhausted (only ₹10 crore remaining).
Q2 FY25 · Developer finance mix not to exceed 15%
Management stated internal view is to keep construction finance mix below ~15% of AUM, currently at 11.7%.
Q2 FY25 · Leverage ratio target of 8x
Management considers 8x leverage as sustainable and will manage capital deployment to reach that level over time.
Q3 FY25 · Medium-term AUM growth of 24-26%
Management expects AUM to grow at 24-26% annually over the next three years, driven by home loans and the new affordable vertical.
Q3 FY25 · OPEX to NIM to decline to 14-15%
Operating expenses as a percentage of net interest income are targeted to fall to 14-15% in the medium term, from 19.8% currently.
Q3 FY25 · ROA of 2-2.2% and ROE of 13-15%
Return on assets is guided at 2-2.2% and return on equity at 13-15% in the medium term, with leverage of 7-8 times.
Q3 FY25 · Credit cost to remain at 20-25 bps
Credit costs are expected to stay in the range of 20-25 basis points, with GNPA between 40-60 bps and provisioning coverage of 40-50%.
Q4 FY25 · Cost of funds to decline 34-35 bps in FY26
Assuming 75 bps cumulative repo rate cuts, management expects cost of funds to drop by 34-35 bps on a full-year basis in FY26.
Q4 FY25 · NIM compression of 10-15 bps expected
With steady book mix, net interest margin could compress by 10-15 bps during FY26, partly offset by asset mix changes.
Q4 FY25 · Credit cost guidance of 20-25 bps on assets
On a steady-state basis (excluding assignment effects), credit cost is expected to be 20-25 bps on assets under management.
Q4 FY25 · No equity capital raise in FY26
Management stated there is no plan to raise new equity capital in FY26, with leverage at 5.1x and headroom up to 7.5x.