Company Update : Bajaj Housing Finance Ltd By Motilal Oswal Financial Services Ltd
AUM growth healthy; reported NIM contracts ~10bp QoQ
PAT grew ~25% YoY; asset quality stable
* Bajaj Housing’s (BHFL) 3QFY25 PAT grew 25% YoY to ~INR5.5b. NII grew 25% YoY to ~INR8.1b. Other income grew 26% YoY to ~INR1.3b, supported by higher assignment income, which stood at ~INR233m (PY: INR129m).
* Opex rose ~6% YoY to INR1.8b. PPoP grew 31% YoY to INR7.5b.
* Net credit costs stood at INR355m, which translated into an annualized credit cost of ~13bp (PQ: ~2bp). Gross of the overlay release, credit costs stood at 0.2% (PY: 0.15).
* BHFL trades at 3.4x FY27E P/BV (Bloomberg estimates).
AUM rises ~26% YoY; disbursements grow ~17% YoY
* AUM grew 26% YoY to ~INR1.08t, while 3QFY25 disbursements grew ~17% YoY to ~INR126b. Home Loans grew ~23% YoY, LAP grew 19% YoY, LRD grew 26% YoY, and Developer Financing grew 59% YoY.
* Management guided for medium-term AUM growth of ~24%-26% and an RoA of ~2.0%-2.2%. This, along with leverage of 7x-8x, will translate into an RoE of 13-15%.
* The developer financing book is an important ingredient in the growth of its retail book. BHFL has been in the industry for seven years, and out of 1,300 cases (to date) in developer finance, the company has seen only four projects slip into NPAs. Of these, two cases are already in the NPA bucket.
Reported NIM contracts ~10bp QoQ; asset quality stable
* BHFL’s reported 3QFY25 NIM contracted ~10bp QoQ to ~4.0% (vs 4.1% in 2QFY25). Reported yields declined ~10bp QoQ to ~9.8%, while CoB was stable at ~7.9%, resulting in spreads remaining stable QoQ at ~1.9%.
* Management shared that competitive intensity, which is already at elevated levels, will continue to persist. Further, yield pressures may arise due to scaling efforts and a strategic shift in the product mix.
* Asset quality was stable with GS3/NS3 at 0.29%/0.13%. PCR declined ~225bp QoQ to ~55%.
* Management guided for optimal leverage of 7x-8x and credit costs of ~20-25bp in the medium term.
* RoA/RoE in 3QFY25 stood at ~2.4%/12% and CRAR was ~28% as of Dec’24.
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
