Bajaj Housing Q2 FY27 Earnings Call — Analysis (NSE: BAJAJHFL)

Bajaj Housing Finance delivered 25% YoY AUM growth to cross ₹1.58 lakh Cr with PAT rising 18% YoY to ₹757 Cr, maintaining its full-year AUM growth guidance of 21-23% amidst repo rate hikes and rising prime competition.

24 Oct 2026 · Analysis by Alpha Inflection

Result quality: strong — Earnings grew. Management sentiment: optimistic.

The take

Q2FY27 Net Total Income (NTI) ₹1254 Cr ( +15% YoY ) . Guidance raised — FY28 insurance commission regulatory… 6%–7% PBT impact / flattish opex-NTI . New story: NIM compression from yield attrition .

Results

AUM grew 25% YoY to ₹1,58,000 Cr; PAT rose 18% YoY to ₹757 Cr with ROA at 2.2%, GNPA steady at 0.29%, and cost of funds moderating 17 bps QoQ to 7.0%.

Financial highlights

Guidance

Management maintained FY27 AUM growth guidance of 21-23%, ROA target of 2.1%-2.3%, and expected full-year NIM compression of ~25 bps.

What management committed to

• [Sambhav] will be taken to around 20% of [the] home loan mix in the medium term (next year). — ~20%, FY28
• [Sambhav] will be taken to around 30% of [the] home loan mix in the longer term (3-4 years). — ~30%, ~FY31
• [Developer Finance] portfolio is intended to grow to 15%–17% of total portfolio, and [management] expects this to materialise sooner rather than later. — 15%–17%, medium term
• If draft insurance commission guidelines are finalised as currently drafted, [BHFL] expects a 6%–7% headwind on PBT and a flattish opex-to-NTI ratio next year. — 6%–7% PBT impact / flattish opex-NTI, FY28
• Assuming three repo rate hikes of 25 bps each, cost of funds is expected to increase by approximately 61 bps from the Q2 FY27 level by Q4 FY27. — ~61 bps increase, Q4FY27

Key themes

Strong growth and rate hike management

How the narrative shifted

• NIM compression from yield attrition: Management reports NIM moderation of 2 bps sequentially to 3.7% in Q2, consistent with the guided 20-25 bps FY27 compression, driven by yield attrition and portfolio churn.
• Strong AUM growth momentum: Maintained, but introduced a conditional note on rate cycle impact on AUM growth.
• Sambhav Housing expansion: Guidance extended with concrete medium and long-term mix targets.
• Resilient asset quality: Asset quality remains robust with GNPA flat at 29 bps, credit cost improving Y-o-Y, and provisioning coverage strong.
• Macro‑driven cost‑of‑funds improvement: Theme pivots from passive improvement to active management of a rising rate environment, detailing the asset-liability match strategy to neutralize portfolio margin impact.
• Tech/AI‑led operational efficiency: Not explicitly featured in the call, replaced by operational updates.
• Interest rate cycle and competitive dynamics: Management extensively discusses the impact of the recent repo rate hike, potential competitive pressure on acquisition pricing, balance transfer risks, and the strategy to pivot toward non-prime segments to offset margin compression.
• Regulatory headwinds (Insurance Commission): Management provides a detailed quantitative assessment of the draft insurance commission guidelines, estimating a 6-7% headwind on PBT and flattish opex-to-NTI ratio if finalised as drafted.

Operational commentary

• Sambhav housing loans crossed ₹500 Cr monthly disbursement run-rate, constituting 16% of overall home loan originations in Q2FY27.
• AUM product mix stood at 53.9% Home Loans (up 22% YoY), Lease Rental Discounting (LRD) up 39% YoY, Loan Against Property (LAP) up 26% YoY, and Developer Finance (DF) up 13% YoY.
• Regulatory Principal Business Criteria (PBC) stood at 60.49% for housing assets and 50.6% for individual home loans on tangible assets as of 30 September 2026.
• Cost of funds reduction was driven by tactical accelerated swapping and substitution of fixed-rate NCDs to floating instruments and lower bank borrowing mix.
• Raised internal Prime Lending Rate (PLR / FRR) by 15 bps effective October 16, 2026, following the RBI repo rate hike; asset-liability floating mix is 88% matched.

Analyst Q&A

• Q. What drove the sequential slowdown in Developer Finance AUM growth and what is the forward strategy?

  Slowdown was driven by project-led high repayments and slower disbursements, not a conscious strategic pullback; sanctions grew significantly in H1 and management targets scaling DF back to 15-17% of the book.

• Q. How will the recent repo rate hike impact cost of funds, portfolio yields, and competitive pricing from banks?

  Around 80-82% of repo hikes pass through directly to cost of funds and portfolio yields because 88% of ALM is floating; any margin pressure will arise only if competitor acquisition pricing lags, in which case non-prime and DF mix will be accelerated.

• Q. What is the anticipated P&L impact if draft guidelines on insurance commissions are implemented?

  Cross-sell constitutes 10-11% of PBT; management expects 4-5% can be offset via efficiencies and processing fees, leaving a net 6-7% PBT impact in the short term under Ind AS and making opex-to-NTI flattish next year.

• Q. Why did fee income rise sharply and salary costs increase 19% YoY?

  Fee income expanded due to higher insurance attachment from Sambhav loans and higher foreclosure charges; salary costs grew due to intensive headcount additions for scaling Sambhav and non-top-six market expansion.

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