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• blogpostTitle: Bajaj Housing Finance Q4 FY26: Growth Holds, Margins Tighten */

Bajaj Housing Finance Q4 FY26: Growth Holds, Margins Tighten

Bajaj Housing Finance ended Q4 FY26 with a clean mix of growth, stable asset quality, and improving operating efficiency. Assets under management rose 23% year on year to 1,40,706 crore, while loan assets (AR) stood at 1,23,745 crore. Profit before tax increased 20% to 866 crore. Profit after tax grew 14% to 669 crore, with management noting that Q4 FY25 included a one-time tax benefit of about 34 crore; on a normalised basis, PAT growth would have been closer to 20%.

The quarter also showed a clear trend that management repeatedly returned to in the earnings call: growth is coming through, but spreads are under pressure as competitive intensity stays high, especially in prime home loans. In parallel, the company used the year to strengthen provisioning on Stage 2 assets, lifting reported credit cost, while keeping headline GNPA and NNPA steady.

Scale and mix: diversified mortgage book continues to expand

AUM growth in Q4 FY26 was supported by both retail and commercial mortgage products. The portfolio mix by AUM at the end of March 2026 was led by home loans at 54.1%, followed by lease rental discounting at 22.4%, loans against property at 10.8%, developer finance at 11.5%, and other loans at 1.2%.

The company highlighted that anchor products remain prime housing and LRD, and the quarter’s growth reflected that bias. On a year-on-year basis, home loan AUM grew 18%, LAP grew 24%, and LRD grew 44%. Developer finance grew 13%, which management described as subdued because funded projects are throwing off higher cash flows.

Disbursements also remained healthy. Q4 FY26 disbursements were 17,506 crore, up 23% year on year and up 6% sequentially. Management attributed the sequential improvement to steady run-rate growth, while noting that Q4 FY25 had a stronger sequential step-up due to a few large commercial transactions.

Financial summary (crore)

Profitability: efficiency improves, but spreads compress

Operating efficiency continued to improve. Opex to net total income was 19.2% in Q4 FY26, down from 21.8% in Q4 FY25. For the full year, opex to NTI improved to 19.7% from 20.9%.

The bigger debate for investors is margins. In Q4 FY26, gross spread was 1.7% and NIM was 3.8%, both down from 4.0% NIM in Q3 FY26 and Q4 FY25. Management attributed spread compression to a 14 bps drop in portfolio yield driven by lower acquisition pricing and run-off of a higher-rate book, partially offset by a 4 bps benefit on cost of funds.

Cost of funds in Q4 FY26 was 7.3% versus 7.9% in Q4 FY25. Sequentially, COF reduced by 4 bps, with management pointing to rate transmission benefits on existing borrowings, partly offset by incremental borrowings at higher money market rates.

In the call, management indicated that Q1 FY27 yields could remain broadly sideways versus Q4 FY26, but also cautioned that through FY27, margin compression is possible as the book reprices lower with competitive acquisition and attrition of the older higher-rate portfolio. They added that a part of this could be offset through opex leverage and lower credit cost if provisioning normalises.

Asset quality: stable NPAs, provisioning tightened

Headline asset quality metrics remained stable. GNPA was 0.27% and NNPA 0.11% at the end of March 2026, unchanged sequentially. Stage 2 assets were reported at 453 crore (0.36%) in Q4 FY26 versus 321 crore (0.32%) in Q4 FY25. Stage 3 provision coverage ratio was 59.78%.

Credit cost in Q4 FY26 was 0.19% annualised, higher than 0.11% in Q4 FY25. Management explained this increase as largely driven by strengthening provisioning coverage on Stage 2 assets, and stated that excluding this strengthening, credit cost would have been around 0.10%.

Product-level disclosure reinforces the low-stress picture in the core mortgage book, while showing where risk is relatively higher. As of 31 March 2026, GNPA in home loans was 0.35%, LAP GNPA was 0.46%, developer finance GNPA was 0.03%, and the company reported nil GNPA in LRD.

Treasury and capital: diversified funding, comfortable buffers

The company continued to emphasise diversification in borrowings, supported by the highest possible domestic credit ratings referenced in the deck. As of March 2026, borrowing mix was 40.8% bank borrowings, 43.9% NCDs, 5.3% commercial paper, and 10.0% NHB refinance.

Liquidity buffers were also highlighted. The company reported a liquidity buffer of 2,662 crore and LCR of 146% in Q4 FY26, above the 100% regulatory requirement.

Capitalisation remains comfortable. Capital adequacy ratio was 22.46% at 31 March 2026, with Tier 1 at 22.01%. Net worth stood at 22,527 crore. Leverage ratio was reported at 5.6 times, and debt-to-equity at 4.6 times.

Strategy watch: Sambhav Housing ramp-up and managing balance transfers

A key operational theme is the build-out of Sambhav Housing, the company’s near-prime and affordable push. The presentation reported an average monthly disbursement run rate of about 410 to 425 crore, with a stated target of 600 crore plus monthly disbursements over the next 12 months. The platform spans 73 urban locations and 72 tier-4 or rural locations, with average ticket size of 28 lakh and 64.6% of customers having CIBIL above 750 at origination.

The call also addressed a central competitive challenge in prime housing finance: balance transfer outflows. Management indicated overall home loan attrition around 20%, with BT-out around 10%, largely to banks, led by public sector banks. It reiterated that regulatory housing thresholds are monitored monthly and are being met.

What to take away

Bajaj Housing Finance ended FY26 at the top end of its earlier assessment on growth, while delivering better-than-expected asset quality and improved cost ratios. The near-term question is not growth intent, but the cost of growth: competitive pricing, elevated money market rates, and the pace of margin compression.

Management signalled that it will provide a fuller FY27 assessment with Q1 results, given rate and macro volatility. Until then, the quarter leaves a clear picture: strong scale-up and stable NPAs, with margins turning into the main variable investors will track.