Bajaj Housing Finance Navigates Competitive Waters with Strong Q2 FY26 Performance

Bajaj Housing Finance Limited (BHFL) has reported a robust performance for the second quarter of fiscal year 2026, demonstrating resilience amidst a highly competitive landscape and a declining interest rate environment. The company's Assets Under Management (AUM) witnessed a significant 24% year-on-year growth, reaching an impressive INR1,26,749 crore. This strong growth translated into an 18% increase in Profit After Tax (PAT), with an annualized Return on Assets (ROA) standing at a healthy 2.3%. The quarter's results underscore BHFL's strategic agility and disciplined execution in the Indian housing finance sector.

Operational Excellence and Asset Quality

Operational efficiency emerged as a key highlight, with the Opex to Net Total Income (NTI) ratio improving to 19.6% in Q2 FY26, down from 20.5% in the corresponding quarter of the previous fiscal year. This improvement reflects effective cost management and the benefits of ongoing digital initiatives. The company's asset quality remained healthy, with Gross Non-Performing Assets (GNPA) improving to 0.26% and Net Non-Performing Assets (NNPA) at 0.12%. The annualized credit cost was maintained at a low 18 basis points, indicating strong underwriting and collection practices. These metrics are well within the company's medium-term guidance, reinforcing investor confidence in its risk management framework.

Strategic Diversification and Future Outlook

Bajaj Housing Finance continues to maintain a well-diversified portfolio, with home loans constituting 55.1% of its AUM, followed by Lease Rental Discounting (21.5%), Developer Finance (11.8%), and Loans Against Property (10.3%). The company's strategy involves deepening its presence in various micro markets and scaling its dedicated business unit for near prime and affordable housing segments. This approach aims to sustain growth in the home loan sector despite intense competition from public sector banks. The management anticipates rapid scaling of the affordable segment, currently acquiring approximately INR250 crore per month.

Digital transformation remains a core strategic pillar, with e-agreement penetration reaching 94% and online customer onboarding at 93% as of September 2025. These initiatives are crucial for enhancing customer experience and operational efficiency. The company is also transitioning from an outsourced manpower model to a fixed-term contract model, with over 1,000 field resources already transitioned, further streamlining operations.

Management's Vision and Investor Confidence

While the portfolio yield moderated due to competitive pressures and rate cuts, management is focused on optimizing pricing based on market conditions and product propositions. The slight moderation in Return on Equity (ROE) to 12.2% was attributed to capital raises in FY25 and the absence of overlay releases. However, the company expects ROA to remain range-bound, and AUM growth to normalize as market rates stabilize and attrition pressures ease. Bajaj Housing Finance's commitment to maintaining the highest domestic credit rating (AAA/stable) and a diversified borrowing mix further strengthens its financial position. The company's strategic clarity, disciplined execution, and proactive risk management continue to build investor trust, positioning it for sustained growth in the dynamic housing finance market.