Bajaj Housing Finance Ltd (BAJAJHFL) Q1 FY27 Earnings Call: Disbursements Grow 33% YoY, Guides NIM Compression of 20-25 Bps

Bajaj Housing Finance Ltd held its Q1 FY27 earnings call on July 29, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Metrics & Growth Trajectory

• Disbursements grew 33% YoY to Rs.19,509 crore in Q1 FY 2026-2027, driven by market share gains in prime home loans and scaling of the Sambhav Housing segment.
• AUM expanded 24% YoY to Rs.1.496 lakh crore, reflecting sustained momentum across the retail housing portfolio.
• PAT rose 23% YoY to Rs.715 crore, with annualized ROA stable at 2.3% and ROE improving to 12.5% (vs. 11.6% in Q1 FY 2025-2026).
• Cost of funds moderated 7 bps sequentially to 7.2% in Q1 FY 2026-2027, aided by the hedged book, natural repayment of older higher-cost borrowings, and reset of some borrowings at lower rates.
• NIM declined 14 bps QoQ to 3.7% due to yield compression from higher-yield attrition and lower-yield origination; spreads remained largely flat at 3-4 bps movement.
• Asset quality remained resilient with GNPA at 29 bps and NNPA at 12 bps; annualized credit cost came in at 5 bps, well below the guided range.

Resilient Metrics with Targeted Guidance

• GNPA of 29 bps and NNPA of 12 bps in Q1 FY 2026-2027; full-year FY 2026-2027 guidance stands at GNPA of 30-35 bps and credit cost of 10-15 bps.
• Q1 credit cost of 5 bps was well below the guided 10-15 bps range, driven by one-offs: a larger assignment of ~Rs.2,300 crore reducing Stage 1 provisioning, and no repeat of the Q4 FY 2025-2026 acceleration in Stage 2 coverage.
• LAP segment GNPA increased to 0.62% in Q1 FY 2026-2027, back within the historical 50-70 bps corridor; management cited cyclicality in prime/high-ticket loans with no specific geography or customer segment driving the rise.
• Construction finance GNPA rose QoQ due to a single account moving from Stage 2 to Stage 3; management noted it is a one-off and teams are actively resolving the account.
• ECL provisioning on Stage 1 remained flat at ~Rs.401 crore despite Stage 1 assets growing ~Rs.7,500 crore sequentially, following a recalibration of the ECL model in the January 2026 board meeting that lowered Stage 1 rates after strong credit performance.
• Management views regulatory reviews (e.g., NHB audits on PLR computation) as constructive for long-term sector resilience and does not see them as overbearing.

Compression Ahead as Guided

• Management expects NIM to moderate by 20-25 bps during FY 2026-2027 from FY 2025-2026 levels, driven by yield compression in a stable interest rate regime where new acquisition yields trail the repricing portfolio.
• Spread guidance for FY 2026-2027 implies a 20-25 bps decline from the FY 2025-2026 average of 3.9%; Q1 FY 2026-2027 already saw a 14 bps drop to 3.7%, implying a further 6-10 bps compression in Q2 and Q3 of FY 2026-2027.
• Cost of funds in Q2 FY 2026-2027 is expected to be sideways with a downward bias relative to the Q1 FY 2026-2027 average, providing partial offset to yield headwinds.
• Limited upward repricing opportunities exist because market acquisition pricing, set by banks, remains stable; any yield benefit will come from an increasing mix of higher-yielding Sambhav loans, but the effect is limited due to Prime's larger base.
• Management described the NIM guidance as “cautious, not conservative,” based on mathematical projections under the assumption of a stable asset mix and no further market pricing decline.

Scaling Near-Prime with Geographic Expansion

• Sambhav Housing monthly disbursement run-rate improved to Rs.450-465 crore in Q1 FY 2026-2027 (vs. Rs.410-425 crore in Q4 FY 2025-2026); on track to hit Rs.600 crore+ run-rate in the next 9 months.
• Management targets an 80:20 prime-to-Sambhav AUM mix by FY 2026-2027 exit (vs. 84:16 currently), with affordable housing comprising ~33-36% of Sambhav disbursements and near-prime comprising ~64-67%.
• Overall Sambhav average ticket size of ~Rs.28 lakhs is expected to trend downward to Rs.26-27 lakhs by FY 2026-2027 exit, driven by geographic expansion into tier 2/3 locations.
• The near-prime book has an average age of only 12 months (business started ~24-28 months prior), limiting balance transfer opportunities and supporting portfolio retention.
• One developer finance account moved to Stage 3 but was already provisioned at 48-49% in Stage 2, exceeding the ECL model’s 33-34% requirement at 90 DPD, so no incremental provisioning was needed.

Sideways Opex, Higher Fee Contribution

• Management expects the opex-to-net-income ratio to remain sideways in FY 2026-2027 versus FY 2025-2026, as NIM compression (lowering the denominator) and ongoing investments in near-prime and affordable housing offset any operating leverage gains.
• Operating efficiency guidance for FY 2026-2027 stands at 19-20%, consistent with the current trajectory.
• Fee and commission income rose in Q1 FY 2026-2027, driven by higher disbursements boosting insurance income; foreclosure and penal charges remained stable year-on-year.
• Assignment (securitisation) levels remain consistent at 12-13% of AUM on a trend basis; quarterly movement can occur but the annual percentage is stable.
• The company is deploying multiple AI initiatives across the loan lifecycle to improve conversion, underwriting, and customer service.

Muted Growth, Stable Guidance Framework

• Industry loan growth was muted at 9.5% in FY 2025-2026; management expects FY 2026-2027 industry growth to be in a similar or slightly lower range, likely below the historical 11-12% norm.
• Residential real estate demand is in a stabilization phase with stopped price momentum; sales are muted compared to FY 2024-2025, when demand was postponed due to price increases.
• Balance transfer out rate slightly decreased in Q1 FY 2026-2027, driven by the company’s own actions in deepening and widening the prime home loan segment; higher growth is from capturing incremental market expansion, not competitors stepping back.
• FY 2026-2027 guidance ranges — ROA: 2.1-2.3%, ROE: 12.5-13%, GNPA: 30-35 bps, credit cost: 10-15 bps, operating efficiency: 19-20%.
• No upside risk to current guidance unless market pricing falls further; management sees low probability of further pricing decline and assesses the outlook quarter-to-quarter.