BAJAJHFL - Bajaj Housing Finance Limited Share Price

Bajaj Housing Finance Limited's management outlook for Q3 FY'26 was positive, highlighting a robust financial performance and forward-looking strategy. The Asset Under Management (AUM) reached Rs.1.33 lakh crore, marking a 23% year-on-year growth, although slightly impacted by higher attrition. The Profit After Tax (PAT) increased by 21% to Rs.665 crore, with an annualized Return on Assets (ROA) of 2.3% and Return on Equity (ROE) of 12.3%. The management reported a healthy asset quality, with Gross Non-Performing Assets (GNPA) at 27 bps and Net NPA (NNPA) at 11 bps.

Key forward-looking points from management emphasized their goal to target a monthly disbursement run rate of Rs.600 crore in their new Sambhav loans segment over the next 12-15 months, with a current monthly run rate of Rs.325-350 crore. The mix of this segment comprises near-prime loans with an average ticket size of Rs.40-60 lakh, and affordable loans with sizes between Rs.15-35 lakh, achieving yields between 9-13%. Additionally, the company aims to maintain a cost-to-income ratio of 14%-15% in the medium term, projecting potential growth in operating margin efficiency due to strategic investments in their affordable lending space.

In response to competitive market conditions, management acknowledged ongoing competitive intensity, particularly from banks, but expressed confidence in maintaining market share and growth through superior underwriting standards and a diversified product mix. Overall, Bajaj Housing Finance aims for substantial growth, leveraging its broad geographic coverage and strong capital adequacy with a CAR of 23.15%.

Here are the major questions and detailed answers from the Q&A section of the earnings conference call:

1. Question: "Why has Tier-1 declined so sharply? Can you talk about that?" Answer: "The Tier-1 decline is due to a regulatory change from the RBI, leading us to provide capital for the entire chunk of undisbursed loans rather than just the next tranche. This conservative approach resulted in the sharp decline we observed this quarter."

2. Question: "What is your medium-term outlook on cost to income?" Answer: "We target a cost to income ratio of 14%-15% in 3-4 years. This is feasible as we expect manageable OPEX growth, despite ongoing investments in our Sambhav loans segment, which will help achieve our growth ambitions."

3. Question: "Can you share the BT-in and BT-out figures for home loans this quarter?" Answer: "Our BT-in for the last quarter was 16.5% of total home loan acquisition, while BT-out was 16.9%. Historically, industry BT-in averages around 15%, indicating we're on par with market trends."

4. Question: "What is the prepayment rate including extensions?" Answer: "Our total prepayment rate is approximately 20%, predominantly through balance transfer (BT), making up 60%-70%. The remaining is from natural attrition and part payments."

5. Question: "What about the competitive intensity in the housing market?" Answer: "Competitive intensity is high, especially in the prime and super-prime segments. However, in near-prime and affordable segments, we see increased player presence without much pricing pressure."

6. Question: "What's your guidance on NIMs and margins next year?" Answer: "We are guiding for an 8-10 bps compression in NIMs for FY'26. Current trends indicate a consistent NIM of around 4%, with higher attrition impacting margins."

7. Question: "How is the Sambhav loan segment performing?" Answer: "The Sambhav loans SBU has achieved a monthly disbursal run rate of Rs. 325-350 crores, and we are targeting to scale this to over Rs. 600 crores in the next 12-15 months."

8. Question: "What is your strategy for managing asset quality?" Answer: "We track various metrics like bounce rates and stage-wise asset movement. Our current asset quality remains healthy, with GNPA at 27 bps and NNPA at 11 bps, indicating stable repayment patterns."

9. Question: "What are your plans regarding assignment volumes and profitability?" Answer: "Assignments are driven by opportunities rather than a fixed annual volume. We'll respond to market conditions, and if home loan growth picks up, assignments will adjust accordingly."

10. Question: "Can you tell us about the staffing structure in your Sambhav loans division?"

Answer: "We have around 600 employees in the front-end for Sambhav loans, along with 150 personnel in credit and operations, ensuring a robust support structure for our initiatives in this segment."