Bajaj Housing Finance Ltd (BAJAJHFL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Bajaj Housing
Moderator: Limited Q2 FY27 earnings conference call hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Kumar from JM Financial Institutional Securities Limited. Thank you, and over to you, Mr. Kumar.
Ajit Kumar (JM Financial Institutional Securities Limited): Thank you, Nirav. Good evening, everyone, and welcome to the 2Q FY27 earnings conference call of Bajaj Housing Finance. I would like to thank the management of Bajaj Housing Finance for giving us this opportunity to host the call. From the management team today, we have Mr. Atul Jain, Managing Director, Mr. Gaurav Kalani, Chief Financial Officer, and the entire senior management team. We will have opening comments from the management team, post which we will open the floor for Q&A. With that, I'll now hand over the call to Mr. Atul Jain for his opening remarks. Over to you, sir.
Atul Jain (Bajaj Housing Finance Ltd): Thank you, Ajit and JM team, for hosting us. A very good evening and welcome to the BHFL Q2 earning calls to all. I have the entire senior management team members with me. We have uploaded investor presentation on our website and stock exchanges. I hope you got a chance to go through the same. I'll focus on key updates from the same presentation for the quarter, which should take around 10 to 12 minutes, and then we'll open the forum for the Q&A. Beginning, I'm on panel number three on the presentation. Last quarter witnessed two significant milestones for the company. We crossed a landmark 1.5 lakh crore AUM driven by strong and diversified growth. Along with that, Sambhav loans crossed monthly disbursement run rate of 500 crore during the quarter. Overall, good quarter across growth, asset quality, and profitability. Disbursements increased by 25% on Y-o-Y basis and AUM growth also was 25% on Y-o-Y basis. PAT growth was 18% Y-o-Y to 980 crores in Q2, while ROA was 2.2% and ROE improved to 12.7%. Operating efficiency continues to improve with opex to NTI ratio at 19.1% as against 19.7% which was in Q2 last year. Asset quality remains stable with GNPA of 29 bps and NNPA of 12 bps, same in line with last quarter. And the operational network stood at 223 branches across 182 locations. Capital adequacy was 21.24% and principal business criteria stood at 60.49% as of 30th September '26 against the 60% regulatory criteria. I'm moving to the next panel, which are quarterly financial indicators. AUM total stood at 1.58 lakh crore as of 30th September, and a quarterly AUM addition was close to 8,580 crores this quarter, against 6,329 crore in Q2 of last year. Product growth across anchor products was good. Home loans AUM improved to 22% growth in Q2 against 20% in last quarter, while LRD growth was also strong at 39% against 41% growth in Q1. LAP grew 26% and DF grew 13% on Y-o-Y basis. AUM growth, AUM mix remained well diversified with a higher home loan composition at 53.9%. Disbursement momentum was good during the last quarter with 25% growth, moving from 15,900 crores to 19,900 crores in Q2 FY27. I'm moving to panel number five. The cost of funds reduced by 17 bps on sequential basis, from 7.2% in Q1 to 7% close to 7% in Q2 FY27. It was mainly due to conversion of fixed rate NCDs to floating rate instrument. We always used to follow this strategy and we had accelerated that strategy in last Q2. Borrowing mix continued to have a higher money market mix at 56%, followed by bank lines at 35% and NHB at 9%. Total gross spreads improved by 7 bps because of driven largely by cost moderation of 17 bps, thereby it was able to offset 10 bps portfolio yield reduction. And NIM moderated slightly by 10 bps sequentially to 3.7% to Q2 FY27. And opex to NTI, as already called out, improved 57 bps from 19.7% in Q2 FY26 to 19.1% in Q2 FY27. Now, moving to the next panel. Asset quality was stable during the quarter, with GNPA flat and sequential basis at 29 bps and NNPA at 12 bps. Credit cost overall moderated by 6 bps on Y-o-Y basis to 10 bps in Q2 FY27 against 16 bps in Q2 FY26. Thereby, PAT increased by 18% Y-o-Y to 757 crore from 643 crore in the same quarter last year. Annualized ROA 2.2% in the current quarter.
Atul Jain (Bajaj Housing Finance Ltd): current year Q2. Now I'll go to panel number 21. Most of the matrix in this panel have already been covered on the previous panels. Net NTI growth was 15%. If I have to just call out separately what has not been called out on YoY basis from 1090 crore to 1254 crore. And PBT at 18%, 980 crore. Coming to half yearly performance, NTI grew 16% to 2429 crore in H1, which why OPEX growth was 10% on YoY basis to 470 crore. Both PBT and PAT growth was 20% to 1908 and 1472 crore, respectively for first half of the year. And OPEX to NTI improved from 20.4% in H1 FY26 to 19.3% in H1 FY27 and credit cost was 8 paisa, 8 8 bps in H1 FY27. ROA for the half year also stood at 2.2% and ROE at 12.6% in H1 FY27. I'll move to panel number 23. As already called out portfolio yield moderated by 10 bps sequentially from 8.9% in Q1 to 8.8% in Q2 while cost of funds dropped from 7.2% to 7% in Q2. Overall gross spread inched up by 7 bps sequentially on sequential basis to 1.8% in Q2 against 1.7% in Q1. I have already talked about other metrics, which are depicted on this panel. I'll come to the next panel for treasury. The borrowing mix continues to be diversified, but with higher composition of NCDs at 50.8%, which has improved 430 bps sequentially, which has offset the moderation of 280 bps in bank borrowing, 90 bps in commercial paper, and 60 bps in NHB risk and the overall refinancing mix for the company. Coming to panel number 29. AUM mix continued to remain diversified with sequential increment in LRD by 90 bps against moderation of 70 bps in developer finance and 20 bps in home loans. Now I am on panel number 31, which is covering Sambhav housing update. Business crossed a critical milestone of 500 crore monthly disbursement run rate in the last quarter with quarterly improvement in disbursement growth. And now Sambhav constitutes 16% of overall home loan originations in Q2. It is progressing well across all metrics with B2C team deepening its penetration and new sourcing channels for B2B and D2C are shaping well. ATS remained stable at 28 lakh and customer having credit score greater than 750 increased to 65%. Salaried customers continue to have a higher mix of 66% even in this business. Moving to panel 36 which is on asset quality. Stage 1 assets improved marginally by 1 bps sequentially from 99.39 to 99.40 with similar reduction in Stage 2 from 32 bps to 31 bps, while GNPA was constant at 29 bps. Provisioning coverage ratio remains to continue to remain healthy with Stage 3 coverage at close to 60% at 59.8%. Moving to the next panel, which is the last panel I'll cover before we open the forum for question. Product level GNPA. Home loans stood at 36 bps in Q2 against 34 bps in Q1, marginally up. LAP GNPA moderated by 1 bps sequentially to 61 bps. LRD had GNPA of 2 bps due to movement of one retail LRD account to NPA during the quarter, which was in Stage 2 last quarter, which moved to Stage 3, excluding which portfolio quality continue to remain strong. Developer finance GNPA was flat at 12 bps. Overall NNPA flat at 12 bps on sequential basis with 1 bps increment in home loan to 16 bps, 4 bps reduction in LAP to 21 bps and LRD NNPA at 1 bps and DF NNPA moderation of 3 bps sequentially. That's all from my end on the updates from the quarter. Happy to take questions. Over to you, Ajit.
Moderator: Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. First question is from line of Kunal Shah from Citi. Please go ahead.
Kunal Shah (Citi): Yeah. Hi. Thanks for taking the questions. So, a couple of questions. One is on developer finance book. Anything to read into it? Was it like higher repayments which have happened during the quarter or we have seen the slowdown in the disbursement momentum itself out there? Because after along we had seen the decline in the portfolio on a sequential basis. And what would be the strategy out there on the
Kunal Shah (Citi): book. And the second question is on overall margin trajectory given that now there is lot of liquidity with the banks as well and within the prime side have we started to see active competition with respect to the rates? And would there be more pressure given that repo rate is also being hiked? So, we will see the pressure on the cost of funds. While, maybe on the yields would there be a limited pricing power to entirely pass it on. And would the margin pressure be relatively higher than what we had anticipated earlier? Yeah, so these are the two questions.
Atul Jain (Bajaj Housing Finance Ltd): Thanks, Kunal. Just to answer the question, the first question was on the DF book. There was it was much higher repayments during the quarter coupled with slower disbursements, both. So, but larger part was higher repayment, which is a project led cash flow, the cash flow momentum was significantly higher. That is what resulted to the book to there. Our strategy remains to grow the book, it is not a strategic call or a con- shift call or a conscious call from the company to reduce the growth in this portfolio. In fact, in the first six months of the year, our sanctions in this business have increased significantly compared to the last year same first half. But in this business, sanctions translate to disbursements and the AUM growth at a lag basis. Going forward, you should see the business composition increasing, and we want to grow this business at a rate of around 15% to 17% of the portfolio. That has always been our state of stance, and we should see that stance back sooner than later. That's on the DF.
Kunal Shah (Citi): And sorry just in terms of slower disbursements, so was it like tightening of the guardrails or something, or maybe it was just within the normal course of a business?
Atul Jain (Bajaj Housing Finance Ltd): No, nothing. Normal course. Normal course. I I called out specifically, there was no conscious strategy at the company end, there's no conscious strategy of the company end. In fact, we remain committed to at a strategic level to grow this business significantly at a higher pace than the company pace. It was just higher attrition, coupled with lower disbursements, which has resulted into 13%. You should not, we we hope that we should be back to the growth trajectory very well in the quarter three and quarter four in this business. Because it is it remains our largest funnel for home loan business, as well as it remains our largest profit driver. So, there is no strategy or a cautious stance at the company end. On the margin trajectory, things are yet to play out. Repo mix rightfully will result into pressure in terms of cost of fund going up. How much translation happens in the field from the yield perspective, on the acquisition pricing, we are yet to see that because this is the repo hike has happened seven, eight days back. Generally, by 20th or 25th of the month is when you, after 15 days of the repo hike, when you start seeing the real acquisition pricing movement by the other leading prime player, which is the banks in this case, how they pass on. If the pass-on through the through the acquisition pricing is lower, we may see higher BT pressure, which will impact AUM growth, because that is what happened in the last scenario of the interest rate movement. But we have to yet to you know, we we cannot give a firm view as of today, because we have to see the market response to the repo rate hike. The banks increasing the MCLR very fast after the repo hike gives us a indicator saying that probably there will be a movement in the acquisition price as well in the housing loan as well, because we have seen leading public sector banks have increased the MCLR very very fast in terms of as soon as the repo hike was there. It gives us an indicator saying that where they will be heading, but we have to wait and watch because of a liquidity what is there in the system for fresh acquisition. That they have to decide as we we will get to know that in next five, seven days Kunal, in the market. But it If the pricing acquisition pricing is not, pass through is not there, it can result into higher attrition pressure on the prime side of the book, but we the to offset that, what we have always stated or have been stating for last four, five quarter, we will continue to expand our presence in the non-prime. We will accelerate that if you see in next two, three months more pricing pressure coming in the prime to offset and maintain the growth stance. We will would accelerate more on the non-prime side, so as to we can continue to balance.
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