Bajaj Housing Finance Q2 FY27 Earnings Call: AUM Crosses Rs. 1.5 Lakh Crore, Sambhav Expansion to Offset Margin Pressure (BAJAJHFL)

Bajaj Housing Finance Ltd held its Q2 FY27 earnings call on October 16, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

AUM Crosses Rs.1.5 Lakh Crore; Profitability Steady Despite Yield Moderation

• AUM of Rs.1.58 lakh crore, +25% YoY — crossed the Rs.1.5 lakh crore milestone in Q2 FY 2026-2027; home loan AUM grew 22% YoY and LRD grew 39% YoY.
• Disbursements of Rs.19,900 crore, +25% YoY — home loan disbursals grew 24% YoY, in line with overall company disbursal growth; average acquisition ticket size was Rs.28 lakh.
• PBT Rs.980 crore and PAT Rs.757 crore, both +18% YoY — ROE improved to 12.7% and ROA stood at 2.2%; OPEX-to-NTI ratio improved to 19.1% from 19.7% in Q2 FY 2025-2026.
• Cost of funds down 17 bps QoQ to 7.0% — driven by accelerated conversion to floating rate instruments; gross spreads improved 7 bps to 1.8%, offsetting a 10 bps portfolio yield moderation to 8.8%.
• GNPA stable at 29 bps, NNPA at 12 bps — credit cost moderated to 10 bps from 16 bps in Q2 FY 2025-2026; home loan GNPA inched up 2 bps sequentially to 36 bps.
• PBC at 60.49% — above the 60% regulatory requirement as of Q2 FY 2026-2027.

Higher-Yield Sambhav Book Scales Up to Offset Prime Margin Pressure

• Sambhav share of HL + acquisition at 16% by value in Q2 FY 2026-2027 — up from 14% in Q1 FY 2026-2027; the portfolio crossed a Rs.500 crore monthly disbursement run rate, with 65% of customers having a bureau score >750.
• Sambhav targets — management guided a Rs.600 crore monthly run rate by end of FY 2026-2027, 20% of home loan mix in FY 2027-2028, and 30% over the next 3-4 years.
• Fee income uptick in Q2 FY 2026-2027 — CFO Gaurav Kalani attributed it to higher insurance and foreclosure income, driven by ~25% disbursement growth in Sambhav loans.
• Non-prime acceleration planned — to mitigate potential prime margin pressure, management plans to accelerate non-prime expansion over the next 2-3 months from Q2 FY 2026-2027 (into Q3/Q4 FY 2026-2027), with rebalancing towards LAP and construction finance if needed.
• Deep investment in near-prime and top-six markets in FY 2026-2027 — affordable housing investment planned for FY 2027-2028.

Repo Hike Response: PLR Increase, Staggered Pass-Through, NCD Shift

• PLR hike effective Q3 FY 2026-2027 — increases new acquisition pricing by 15-20 bps (specifically 15 bps for new acquisitions); management guided that pricing will be recalibrated based on market dynamics from Q3 FY 2026-2027.
• 15 bps increase on the internal FRR book in Q2 FY 2026-2027 — effective Q3 FY 2026-2027, as the first step of a staggered pass-through of rising funding costs; roughly 25-30% of the loan book is repo-linked and will reset automatically in Q3 FY 2026-2027.
• Balance sheet optimized with 80-82% flow-through of repo rate changes — to both cost of funds and portfolio yields (forecast for FY 2026-2027), limiting margin compression to only new acquisition pricing; ~80% of liabilities are on EBLR with MCLR borrowing at only 1-2%.
• Cost of borrowing saw a 20 bps one-off reduction in Q2 FY 2026-2027 — from maturing high-cost borrowings, book conversion, and a shift to money markets; this now serves as the base for the Q3 FY 2026-2027 trajectory.
• Last NCD issuance cost ~7.04% for 10-year money post-hedging — MD Atul Jain noted this was pre-RBI policy on Oct 6, 2026, and no borrowings have been raised from NCDs or banks post-policy; NCDs were cheaper than bank loans pre-policy, prompting a mix shift over the last 6-9 months (into FY 2026-2027). NCD share rose 430 bps sequentially to 50.8%.
• Repo hike transmission estimate — management estimated that if three 25 bps repo rate hikes occur (Oct/Dec/Feb FY 2026-2027), ~80% (~61 bps) should flow through to the cost of funds by March FY 2026-2027.

BT Attrition Is the Key Watch Item; Demand Tied to Price Expectations, Not Rates

• BT attrition risk flagged post the early October 2026 repo rate hike — management flagged a risk of higher balance transfer pressure on AUM growth if bank acquisition pricing does not pass through fully by late October 2026; 1-2 banks raised prime rates by 15-20 bps post-hike, with broader market pricing clarity expected by late October 2026 (H2 FY 2026-2027).
• Prime pricing competition seen as permanent — management views intense prime pricing competition as a permanent feature of the market.
• Demand elasticity argument — management argued housing demand elasticity is higher with property price expectations than interest rates, citing highest industry sales in CY24 (when rates were highest in ~6-7 years) vs sluggish demand and industry disbursement growth near 0-1% in FY25-26 (when rates were cut).
• Q1 FY27 industry data cited — disbursals growth of 18% vs AUM growth of 10% as evidence that balance transfers drive repayment rates during interest rate instability; part-prepayment rates were highest in their portfolio in FY26 irrespective of the rate cycle.
• Attrition parallel to FY 2025-2026 — management flagged higher attrition risk on prime housing and LRD in FY 2026-2027 if acquisition pricing lags, drawing parallels to the attrition that slowed AUM growth to 23% in FY 2025-2026.

DF Dip Not Strategic; Salary Costs to Keep Rising Through FY 2027-2028

• DF book decline not strategic — management confirmed it was driven by higher project-led repayments and slower disbursements, with sanctions in H1 FY 2026-2027 significantly higher than H1 FY 2025-2026; growth expected to resume in Q3 and Q4 FY 2026-2027, with a DF book target of 15-17% of the portfolio (period unspecified).
• Loan assignment of ~Rs.1,428 cr in Q2 FY 2026-2027 — vs ~Rs.2,600 cr in Q1; income on derecognized loans at ~Rs.40 cr vs ~Rs.68 cr in Q1; strategy targets 11-13% of book off-balance sheet.
• Salary expenses rose 19% YoY in Q2 FY 2026-2027 — management expects continued YoY increases for the next four quarters (Q3 FY 2026-2027 through Q2 FY 2027-2028) due to headcount expansion in Sambhav and non-top six markets, with stabilization expected after FY 2027-2028.
• IHL PBC ratio at 50.6% — per regulatory definition (denominator is total tangible assets) as of Q2 FY 2026-2027; home loan AUM at 53.9%, with management estimating IHL AUM below 50% given non-HL assets were primarily assigned out over the past 5-6 quarters.

FY27 Guidance Held Despite Faster Growth; Insurance Guidelines a FY28 Overhang

• Management declined to revise FY 2026-2027 guidance despite faster AUM growth — citing uncertainty from the current interest rate cycle and potential BT attrition pressure.
• ~25 bps NIM compression guidance for FY 2026-2027 maintained — against the balanced 88:88 asset-liability ratio; 17 bps already realized in H1 FY 2026-2027 vs FY 2025-2026, with an additional 1-2 bps downside risk if acquisition pricing pressure intensifies.
• ~25% AUM growth guidance for FY 2026-2027 maintained — but management flagged a risk of dropping to 22-23% if the elevated BT attrition pressure seen in FY 2025-2026 recurs. Note: a separate segment guided FY 2026-2027 AUM growth at 21-23%, with H1 FY 2026-2027 tracking higher at ~25%.
• ROA guidance for FY 2026-2027 maintained at 2.1-2.3% — the current run-rate is 2.2%.
• Draft insurance commission guidelines risk — management guided that if the draft guidelines are finalized as is, a 6-7% impact on PBT is likely in FY 2027-2028, with only 4-5% offsettable, potentially making the OpEx-to-NTI ratio flattish in FY 2027-2028 instead of the guided annual 1% improvement.
• Portfolio repricing expected to fully offset cost of fund movement in FY 2026-2027 — preventing margin compression on the existing portfolio; the primary margin risk for FY 2026-2027 is if market acquisition pricing fails to move in line with the cost of fund movement, potentially creating additional attrition pressure.