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Aggressive competition from banks
View Risks →Bajaj Housing Finance Limited — Q4 FY25
Bajaj Housing Finance reported a strong Q4 FY25 with PAT surging 54% YoY to INR 587 crore, driven by 26% AUM growth to INR 114,684 crore and improving operational efficiency (OpEx-to-NTI ratio improved from 27.1% to 21.7%).
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Bajaj Housing Finance reported a strong Q4 FY25 with PAT surging 54% YoY to INR 587 crore, driven by 26% AUM growth to INR 114,684 crore and improving operational efficiency (OpEx-to-NTI ratio improved from 27.1% to 21.7%). Asset quality remained pristine with GNPA at 0.29% and NNPA at 0.11%. The company is investing in its Near Prime & Affordable SBU and non-top-6 markets to drive future growth. Management expects a 34-35 bps decline in cost of funds in FY26 assuming 75 bps repo rate cuts, but NIM compression of 10-15 bps is likely, partly offset by a favorable asset mix shift (e.g., developer finance share increasing). Key risk: competitive intensity from banks, especially PSUs, could pressure yields more than anticipated.
बजाज हाउसिंग फाइनेंस ने चौथी तिमाही में शानदार प्रदर्शन किया। कंपनी का मुनाफा पिछले साल की तुलना में 54% बढ़कर 587 करोड़ रुपये हो गया। इसकी वजह कर्ज देने में 26% की बढ़ोतरी (कुल कर्ज 1,14,684 करोड़ रुपये) और खर्चों पर बेहतर नियंत्रण है। कंपनी का खराब कर्ज बहुत कम है - सिर्फ 0.29%। भविष्य में बढ़ोतरी के लिए कंपनी नए ग्राहकों और छोटे शहरों पर ध्यान दे रही है। अगर रिजर्व बैंक ब्याज दरें घटाता है तो कंपनी की लागत कम हो सकती है, लेकिन मुनाफे पर थोड़ा दबाव पड़ेगा। बैंकों से कड़ी प्रतिस्पर्धा एक बड़ी चुनौती है।
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AUM
INR 114,684 Cr
+26% YoY
Assets under management grew 26% year-over-year to INR 114,684 crore as of March 2025.
Disbursements
INR 14,254 Cr
+25% YoY
Quarterly disbursements increased 25% YoY to INR 14,254 crore.
OpEx to NTI
21.7%
-540 bps YoY
Operating expense to net total income ratio improved from 27.1% in Q4 FY24 to 21.7%.
GNPA
0.29%
Flat YoY
Gross non-performing assets remained stable at 0.29% as of March 2025.
What Changed vs Last Quarter
NEW
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.
NEW
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.
NEW
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.
UPDATED
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.
DROPPED
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.
DROPPED
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.
DROPPED
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.
NEW RISK
Aggressive competition from banks
PSU banks have become more aggressive post repo rate cuts, and private banks were aggressive in March, potentially pressuring yields and market share.
NEW RISK
NIM compression from rate cuts
Management 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).
NEW RISK
Impact of exit penalty removal on LAP
RBI's proposed removal of exit penalties on floating rate loans could increase balance transfers in the LAP segment, though management expects limited material impact.
NEW RISK
ALM mismatch risk
With long-tenor home loans (behavioral maturity 6-8 years) funded by shorter-term liabilities (average 3-5 years), ALM risk requires active management.
RISK GONE
Real estate cycle downturn
A potential slowdown in residential real estate sales could impact developer finance book growth and asset quality.
RISK GONE
Competitive intensity compressing spreads
Intense competition in mortgage lending may compress net interest margins and spreads, affecting profitability.
RISK GONE
Execution risk in affordable housing vertical
The new near-prime and affordable housing segment carries higher origination costs and credit risk, which may not materialize as expected.
RISK GONE
Regulatory changes in housing finance
Changes in regulatory requirements, such as the 50% individual home loan norm, could constrain business mix or increase compliance costs.
Fast read
Guidance and risk preview
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.
PSU banks have become more aggressive post repo rate cuts, and private banks were aggressive in March, potentially pressuring yields and market share.
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