Company Update : Bajaj Housing Finance Ltd By Motilal Oswal Financial Services Ltd
Healthy AUM growth of ~26% YoY; reported NIM stable QoQ
PAT growth at ~54% YoY led by a lower effective tax rate; asset quality stable
* Bajaj Housing (BHFL)’s 4QFY25 PAT grew 54% YoY to ~INR5.9b. FY25 PAT rose ~25% YoY to INR21.6b. NII grew 31% YoY to ~INR8.2b in 4QFY25. Other income grew 51% YoY to ~INR1.3b, aided by higher assignment income, which stood at ~INR461m (PY: INR4m).
* BHFL’s opex rose ~7% YoY to INR2.1b. The opex was slightly elevated as the company continued to invest in both the management team and its new business segments. PPoP grew ~43% YoY to INR7.5b for the quarter.
* Net credit costs stood at INR296m, which translated into annualized credit costs of ~11bp (PQ: ~13bp and PY: ~16bp). The company guided for steadystate credit costs of ~20-25bp.
* BHFL trades at 4.2x FY27 P/BV (based on Bloomberg consensus).
AUM jumps ~26% YoY; disbursements rise ~25% YoY
* AUM grew 26% YoY to ~INR1.15t, while disbursements rose ~25% YoY to ~INR143b. Home Loans grew ~22% YoY, LAP rose 28% YoY, LRD grew 24% YoY, and Developer Financing increased 49% YoY in 4QFY25.
* Management guided a medium-term AUM growth of ~24-26% and an RoA of ~2.0-2.2%.
* The company aims to increase developer financing in its loan mix to ~15% (from ~12% as of Mar’25). Within the new SBU of affordable housing finance, the primary focus will be on acquiring fresh home buyers, with only 10-15% of the business expected to come from balance transfers.
Reported NIM steady QoQ; asset quality broadly stable
* BHFL’s reported NIM in 4QFY25 was stable QoQ at ~4.0%. Reported yields declined ~10bp QoQ to ~9.7%, while CoB was stable at ~7.9%. This led to ~10bp QoQ dip in spreads to ~1.8%.
* Management expects an NIM compression of ~10-15 bps in FY26 but aims to offset it through product improvement and growth in near-prime and affordable housing segments. Management shared that against an expected ~75bp repo rate cut, the company foresees a ~35bp decline in its CoB and a pass-through of ~45-50bp to customers.
* Asset quality was largely stable, with GS3/NS3 at 0.29%/0.11%. PCR rose ~5pp QoQ to ~60.3% (PQ: ~55.5%).
* Management guided an optimal leverage of 7-8x and credit costs of ~20-25bp in the medium term.
* The RoA/RoE stood at ~2.4%/12.0% in 4QFY25, and CRAR was ~28.2% as of Mar’25.
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