Bajaj Housing Finance Q4 FY26: ICICI sees 37% upside

Earnings season context: why April results matter

Several widely tracked Indian companies, including Adani Power, Vedanta, Bajaj Finance and Waaree Energies, were scheduled to report March-quarter earnings around April 23, keeping markets sensitive to result-linked moves. Within financials, the spotlight stayed on Bajaj Housing Finance and Bajaj Finance because both names have been active in broker models and near-term positioning. The latest set of notes highlights a familiar split: steady reported profitability, but ongoing pressure on spreads and sharper scrutiny of growth guidance. That combination tends to drive quick price reactions, even when headline numbers look stable.

Bajaj Housing Finance Q4 FY26: key performance snapshot

Bajaj Housing Finance Ltd. reported what broker commentary described as a steady Q4 FY26 performance. Return on assets (RoA) was reported at 2.2% and return on equity (RoE) at 12%, in line with management guidance and an eight-quarter average cited in the report. Net interest margin faced pressure due to intensifying competition in the prime housing segment. Profit after tax (PAT) was described as flat sequentially at Rs 665 crore. The company’s stance, as captured in the note, remained that RoA of 2.0% to 2.2% is maintainable for FY27.

Where growth is coming from: AUM and disbursements

The Q4 FY26 commentary pointed to continued balance sheet expansion. Asset under management (AUM) grew 23% year-on-year and 5% quarter-on-quarter, with growth led by lease rental discounting (LRD) and loan against property (LAP). LRD AUM was cited up 44% YoY and LAP up 24% YoY in Q4 FY26. Disbursements rose to Rs 17,500 crore in Q4 FY26, up 6% QoQ and 23% YoY. In the affordable and near-prime “Sambhav” loans segment, monthly disbursements were stated at Rs 410-425 crore, with a stated internal target of crossing a Rs 600 crore run-rate over the next 12 months.

Margin and spread trends: what changed in the quarter

The same note flagged spread compression as the immediate headwind. Gross spread moderated by about 10 basis points QoQ to 1.7%. Portfolio yields were cited at 8.9%, down around 14 basis points QoQ, attributed to lower acquisition pricing and attrition of the higher-rate book. Management also highlighted lower incremental yields in home loans at about 8.1%-8.15% versus FY26 yields of 8.5%-8.6%, suggesting further compression in FY27. Cost of borrowings moderated by 4 basis points QoQ to 7.3%, although incremental cost of borrowings during Q4 FY26 was noted as higher, especially for money market borrowings.

Efficiency and credit costs: offsets to spread pressure

Broker commentary pointed to operational levers that may soften the impact of NIM pressure. Cost-to-income ratio was said to have dropped by more than 200 basis points YoY, indicating improved efficiency. The outlook section emphasised that moderated credit costs, along with operating efficiencies, could help support RoA even as yields compress. Management guided that Q1 FY27 margins are expected to be broadly stable versus Q4 FY26, but some NIM compression is anticipated through FY27 as lower-yield loans replace older, higher-yield assets. Within this framework, RoA was guided to stay at the upper end of the 2.0%-2.2% band.

Market reaction: stock movement on results day

The shares of Bajaj Housing Finance were reported down over 1% intraday, touching Rs 90.01 after the Q4 FY26 performance update. The move reflects a typical pattern for lenders facing spread concerns, where markets weigh the sustainability of profitability against growth and competitive intensity. The price action was also accompanied by active broker positioning and updated valuation frameworks focused on FY27 book multiples.

Broker view: ICICI Securities reiterates Buy

ICICI Securities maintained a “Buy” rating with an unchanged target price of Rs 125. The note valued the stock at 4x FY27E price-to-book (P/B). Using the reported intraday low of Rs 90.01 as the reference point, that target implies roughly 39% upside, though the headline claim in the provided text framed the potential rally at 37%. The ICICI view leaned on diversified product presence across housing loans, LRD, developer finance (DF) and LAP, along with efficiency improvements and moderated credit costs as offsets to NIM pressure.

Market share ambition: 5% home loan originations target

A key strategic datapoint in the article was the company’s aim to increase share of home loan originations to 5% from the current 2.5%-2.7%. The brokerage note linked this to a diversified portfolio approach rather than reliance on a single sub-segment. For investors, the market share target matters because it frames the expected growth runway even in a more competitive prime segment. However, the same commentary also acknowledged that competitive intensity is already pushing pricing down.

Bajaj Finance: Q4 trading reaction and broker split

Bajaj Finance shares were reported to fall nearly 6% in trade on April 30 after March-quarter earnings, with one report citing a 5.82% fall to Rs 8,560. The coverage attributed the weakness to profit booking after a strong run and to concerns around higher credit cost and one-time additional provisions. Bajaj Finance was also described as the best-performing Nifty 50 stock in 2025 so far, with gains of over 30% in 2025 to date in one account, while another section noted the stock was up 24% year-to-date. Despite the post-result dip, multiple brokerages reiterated positive stances, while at least one turned more cautious on valuation.

Bajaj Finance Q4 metrics cited in the reports

One report put consolidated net profit for the March quarter at Rs 4,545.6 crore, up 19% year-on-year. Net interest income (NII) was cited at Rs 9,807.1 crore, up 22% year-on-year. Asset quality metrics were stated as gross NPAs at 0.96% and net NPAs at 0.44%. Assets under management were reported at Rs 4.17 lakh crore, up 26% year-on-year. Separately, guidance commentary referenced FY26 AUM growth guidance of 24%-25% versus 25%-27% earlier, along with credit cost guidance of 1.85%-1.95%.

Key facts table

Why the updates matter for investors

For Bajaj Housing Finance, the core debate is straightforward: strong growth and efficiency improvements are being weighed against competitive pressure on pricing. The company’s guided RoA band of 2.0%-2.2% for FY27, along with the reported 2.2% in Q4 FY26, provides a clear benchmark for future quarters. On Bajaj Finance, the sell-off highlighted how quickly markets can re-price a stock after a strong run when guidance moderates, even if profit and NII growth remain double-digit. Broker target prices in the supplied text show dispersion, reflecting different comfort levels on valuation versus earnings visibility.

Conclusion

Bajaj Housing Finance’s Q4 FY26 update showed steady profitability metrics and strong AUM and disbursement growth, while broker notes flagged near-term spread compression as a continuing risk. ICICI Securities reiterated a Buy on BHFL with a Rs 125 target, anchored to FY27E P/B. For Bajaj Finance, the post-results decline on April 30 underscored how guidance and credit cost assumptions can dominate near-term sentiment. Investors will track Q1 FY27 margin commentary for BHFL and how Bajaj Finance executes against its FY26 AUM growth and credit cost guidance.