Bajaj Housing Q1 FY27 Earnings Call — Analysis (NSE: BAJAJHFL)

Bajaj Housing Finance reports 33% disbursement growth in Q1FY27 but guides NIM to moderate 20–25 bps for the full year amid yield compression.

4 Aug 2026 · Analysis by Alpha Inflection

The take

Q1FY27 Net Total Income ₹1,175 Cr ( +16% YoY ) . New guidance — FY27 operating efficiency (opex to n… 19%–20% . New story: NIM compression from yield attrition .

Results

Revenue (net total income) ₹1,175 Cr +16% YoY; PAT ₹715 Cr +23% YoY; AUM ₹1,49,600 Cr +24% YoY; NIM 3.7% (-14 bps QoQ); GNPA 29 bps, credit cost 5 bps annualised.

Financial highlights

Guidance

FY27 NIM expected to moderate 20–25 bps from FY26; credit cost guided at 10–15 bps; operating efficiency 19–20%; ROA 2.1–2.3%; ROE 12.5–13%; leverage ~6.1x by year-end.

What management committed to

• NIM is expected to moderate by 20–25 bps during FY27 from what it was in FY26. — 20–25 bps, FY27
• [FY27] operating efficiency (opex to net income) will be in the range of 19% to 20%. — 19%–20%, FY27
• [FY27] GNPA will remain in the range of 30–35 bps. — 30–35 bps, FY27
• [FY27] credit costs will be in the range of 10–15 bps. — 10–15 bps, FY27
• [FY27] provisioning coverage on GNPA will stay between 50% and 60%. — 50%–60%, FY27
• [FY27] ROA is assessed to be in the range of 2.1% to 2.3%. — 2.1%–2.3%, FY27
• [FY27] leverage is likely to end the year at around 6.1x, within a range of 5.8–6.3x. — ~6.1x (range 5.8–6.3x), FY27
• [Sambhav Housing] is on track to achieve a disbursement target of INR600 crores plus in the next 9 months (i.e., by Q4FY27). — INR600 crores plus, Q4FY27
• Overall Sambhav housing average ticket size may move down from the current INR28 lakh to INR26–27 lakh by year‑end, driven by greater share of non‑metro locations. — INR26–27 lakh (from INR28 lakh), FY27
• [Q2FY27] cost of funds will be sideways with a downward bias compared to Q1’s 7.2%. — sideways with a downward bias (≤7.2%), Q2FY27

Key themes

Strong AUM growth, margin normalization

How the narrative shifted

• NIM compression from yield attrition: Management explains that in a stable interest‑rate environment, higher‑yielding legacy loans run off and are replaced at lower acquisition rates, compressing NIM; they guide a 20–25 bps reduction for FY27.
• Strong AUM growth momentum: Record quarterly AUM growth (₹8,918 Cr) and disbursements (₹19,509 Cr) across all product segments, driven by deepening, widening, and Sambhav scale‑up.
• Sambhav Housing expansion: Sambhav (affordable/near‑prime) run rate accelerated sequentially and is on track to cross ₹600 Cr monthly; geographic expansion into non‑metro locations to gradually reduce ticket sizes.
• Resilient asset quality: GNPA at 29 bps and low credit cost of 5 bps (one‑off aided by assignment); full‑year guidance of 30–35 bps GNPA and 10–15 bps credit cost signals confidence in portfolio health.
• Macro‑driven cost‑of‑funds improvement: Cost of funds fell 7 bps QoQ due to maturity of higher‑cost borrowings and hedging; Q2 seen sideways‑to‑down, but yield compression is the primary margin driver.
• Tech/AI‑led operational efficiency: New panel showcases AI deployment across the loan lifecycle to improve controllership and customer experience; not a near‑term margin driver but a positioning element.

Operational commentary

• Sambhav Housing monthly disbursement run rate rose to ₹450–465 Cr in Q1 (from ₹410–425 Cr in Q4); on track for >₹600 Cr within nine months; 73 urban + 72 rural locations; affordable mix ~33–36% of disbursements; salaried mix 68%; ~65% of customers with bureau score >750.
• AI initiatives deployed across loan lifecycle (origination, underwriting, collateral assessment, customer service) for controllership and efficiency; key modules: voice agent, credit PD call intelligence, collateral intelligence, geo-analytics, AI customer assist, AI interview agent.
• ₹2,300 Cr loan assignment executed in Q1 (normal course, ~12–13% of AUM); led to release of Stage 1 provisions and lower credit cost.
• Borrowing mix well diversified: money market 52%, bank borrowings 38%, NHB refinance 10%; NCD mix up 2.6% sequentially.
• Geographic presence at 224 branches across 182 locations.
• Portfolio composition: home loans 54.1%, LAP 10.3%, LRD 23.1%, developer finance 11.4%.

Analyst Q&A

• Q. Breakdown of the 20–25 bps NIM compression and potential for upward repricing of loans.

  Compression is entirely yield‑driven because in a stable rate regime the legacy higher‑yield book attrit and is replaced at lower acquisition IRRs; limited repricing opportunity as market pricing remains rangebound, with only a mix shift toward Sambhav providing some uptick.

• Q. Reason for very low 5 bps credit cost vs full‑year 10–15 bps guidance.

  One‑off factors: a large ₹2,300 Cr assignment out released Stage 1 provisions, and no repeat of the Q4FY26 Stage 2 provision build‑up for macro uncertainty.

• Q. Why provisioning did not increase when accounts moved from Stage 2 to Stage 3 in LAP and developer finance.

  LAP pool dynamics: older NPA accounts rolled back with higher provisioning offset new entries at lower DPD provisioning. In developer finance, the one account was already provisioned at 48–49% in Stage 2, above the 33–34% required at 90 DPD, so no incremental provision needed.

• Q. What is driving the reduction in portfolio attrition (BT‑out) and who has stepped off the pedal?

  Attrition is lower but still being watched; it is not that competitors have ceded space, but the company is gaining a bit more from industry growth through deepening and widening efforts, and BT‑out pressures have eased slightly in prime home loans.

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