Bajaj Housing Finance has announced an impressive 54% year-on-year surge in net profit, reaching ₹587 crore for the March quarter, driven by strong demand for premium housing and escalating property prices. This substantial growth reflects the company’s robust performance and strategic positioning in the competitive housing finance market.

Strong Financial Performance

For the fourth quarter, the company reported a 31% increase in net interest income, totaling ₹823 crore. Furthermore, assets under management (AUM) experienced a remarkable 26% growth, climbing to ₹1.14 trillion. Notably, loan assets rose by 25%, reaching ₹99,513 crore.

• Net Total Income (NTI): Increased by 34% to ₹958 crore.
• Loan Losses and Provisions: Reduced to ₹30 crore.
• Gross Non-Performing Assets (GNPA): Improved to 0.29%, down from 0.27% the previous year.
• Net Non-Performing Assets (NNPA): Slightly increased to 0.11% from 0.10%.

Decreasing Operating Expenses

Bajaj Housing Finance also reported that operating expenses as a percentage of NTI fell to 21.7% in Q4, compared to 27.1% in the same quarter of FY24. The cost of funds remained stable at 7.9% and is projected to decline in the near future.

Atul Jain, the managing director, highlighted the potential for lower funding costs due to two recent repo rate cuts and an anticipated third cut this year. He noted that while this might lead to a 10-15 basis points compression in margins, the company is prepared to address this through strategic asset management.

Diversified Portfolio Strategy

Bajaj Housing Finance boasts a well-diversified portfolio, with home loans constituting 56.2% of its assets. The composition is as follows:

• Lease Rental and Discounting: 19.1%
• Loans Against Property: 10.1%
• Developer Finance: 12.5%

The company aims to enhance its developer financing share to around 15% in the coming years, further strengthening its market position.

Future Growth Initiatives

Looking ahead, Bajaj Housing Finance has emphasized its commitment to expanding its management team and investing in strategic business units, particularly in non-metro markets for the fiscal year 2026. New initiatives such as e-agreements and online customer onboarding have yielded positive outcomes, achieving 93% and 80% penetration rates, respectively, by March 2025.

The company has set ambitious medium-term goals, aiming for AUM growth of 24-26%, targeting GNPA levels between 40-60 basis points, and maintaining a provision coverage ratio of 40-50%. Operating expenses are expected to decrease to 14-15% of NTI, with credit costs projected at 20-25 basis points.

No Immediate Capital Plans

Bajaj Housing Finance currently has no plans to raise additional capital this year, as they have a two-year window to comply with the 25% public holding guidelines, according to Jain.

In related news, the parent company, Bajaj Finance, announced it will explore the possibility of a share subdivision and bonus issue on April 29, coinciding with its quarterly earnings report.

This robust performance and strategic direction position Bajaj Housing Finance favorably for continued growth in the housing finance sector.