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Informist, Wednesday, Jul. 29, 2026

 

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--Bajaj Housing Fin: Collection efficiency is expected to improve 
--CONTEXT: Comments from Bajaj Housing Fin mgmt in post earnings analyst call 
--Bajaj Housing Fin: Expect gross NPA ratio of 15-20 bps in FY27 
--Bajaj Housing Fin: Expect return on equity of 12.5-13% in FY27 
--Bajaj Housing Fin: NIM may remain under pressure as loan yields compress 
--Bajaj Housing Fin: Cost of funds to move sideways in Q2 with downward bias 
--Bajaj Housing Fin: Average loan size in affordable housing may come down 
--Bajaj Housing Fin: Expect 6-10 bps decline in NIM in Q2, Q3 
--Bajaj Housing Fin: Industry loan growth may remain muted in FY27 
--Bajaj Housing Fin: Industry loan growth may remain below 12% in FY27

 

By Kabir Sharma and Meera Nair

 

MUMBAI – Bajaj Housing Finance expects net interest margins to remain under pressure through the current financial year as loan yields continue to compress in a competitive lending environment, even as the company anticipates stable asset quality and return ratios, the company's management said during a post-earnings analyst call following its June-quarter results.

 

The management said net interest margin is likely to decline by another 6-10 basis points over the second and the third quarters after falling 14 basis points sequentially to 3.70% in the June quarter. For the full financial year, the company continues to expect margin compression of 20-25 basis points from the previous year's level, largely due to lower-yielding new loans replacing older, higher-yielding assets rather than any sharp increase in the funding costs. 

 

Management noted that while borrowing costs have risen in certain parts of the market, pricing for new home loans has remained broadly unchanged because large housing finance companies continue to be price takers in a highly competitive market. As a result, older, higher-yield loans are being replaced with fresh loans carrying lower yields, weighing on profitability. 

 

On the funding side, Bajaj Housing Finance expects its cost of funds to move sideways in the second quarter, albeit with a downward bias. The moderation is expected to be supported by the maturity of older, higher-cost borrowings, refinancing at lower rates and gains from its hedged borrowing book.

 

The company also struck a cautious note on the housing finance industry, saying overall loan growth is likely to remain muted in the current financial year. It expects industry loan growth to remain below 12% in FY27, with the home loan market likely to expand by around 9-10%, broadly in line with the previous year. The company attributed the slower growth outlook to stabilising residential property prices after a strong run-up over the past two years, which has reduced the urgency among homebuyers to advance purchase decisions. 

 

While management said balance transfer outflows in its prime home loan portfolio moderated during the June quarter, it intends to monitor another quarter before concluding whether the trend is sustainable. The company expects collection efficiency to improve going forward, supported by stable customer repayment behaviour and no visible deterioration in credit trends across its lending segments. 

 

Despite pressure on margins, Bajaj Housing Finance maintained its profitability guidance. The company expects return on equity to be in the range of 12.5-13.0% in FY27, aided by continued operating efficiency improvements and healthy leverage levels. It also expects gross non-performing assets to remain in the range of 30-35 basis points during the year, reflecting resilient asset quality across its portfolio. 

 

In its affordable housing-focused Sambhav business, the financier said average loan sizes are likely to decline gradually as the company expands further into tier-II and tier-III markets. The average ticket size for affordable housing loans is expected to remain around INR 1.7 million to INR 1.8 million, while the overall Sambhav portfolio's average loan size could soften from about INR 2.8 million to INR 2.6 million over time due to a higher contribution from smaller cities. 

 

Bajaj Housing reported a 23% increase in net profit for the June quarter to INR 7.15 billion. Wednesday, Bajaj Housing Finance shares ended at INR 87.63 on the NSE, up 2.30% over Tuesday.  End

 

Edited by Akul Nishant Akhoury

 

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