Bajaj Housing Finance's September-quarter results showed continued growth in its loan book and profitability, but brokerages remain divided on the outlook as competition in prime housing, potential margin pressure and proposed insurance commission regulations weigh on sentiment.
Citi maintained its Sell rating and cut its target price to Rs 82 from Rs 85, while HSBC retained Reduce with a target of Rs 76. Emkay, however, retained its Add rating and a target price of Rs 85, citing healthy asset growth, robust asset quality and the potential for higher-yielding affordable housing loans to cushion margin pressure.
Bajaj Housing Finance reported an 18% year-on-year increase in net profit to Rs 757 crore in Q2 FY27, while assets under management (AUM) rose 25% to Rs 1.58 lakh crore. Management retained its guidance for 21–23% AUM growth.
Bajaj Housing Finance Q2 Results: Profit Rises 18%, AUM Up 25%
Bajaj Housing Finance reported net profit of Rs 757 crore for the September quarter, up 18% from Rs 643 crore in the year-ago period. Total income increased 18.3% to Rs 3,251 crore from Rs 2,748 crore.
AUM rose 25% year-on-year to Rs 1.58 lakh crore as of September 30, 2026, compared with Rs 1.27 lakh crore a year earlier.
Net interest income increased 10% to Rs 1,055 crore from Rs 956 crore, while net total income rose 15% to Rs 1,254 crore from Rs 1,090 crore. Profit before tax climbed 18% to Rs 980 crore from Rs 833 crore.
The operating expenses-to-net-total-income ratio improved to 19.1% from 19.7% a year earlier. Loan losses and provisions declined to Rs 35 crore from Rs 43 crore.
Asset quality remained comfortable, although gross non-performing assets edged up to 0.29% from 0.26% a year earlier. Net NPA remained unchanged at 0.12%. The provisioning coverage ratio on Stage 3 assets stood at 60%, while the capital adequacy ratio, including Tier-II capital, was 21.24%.
Citi Cuts Target Price To Rs 82, Retains Sell
Citi lowered its target price on Bajaj Housing Finance to Rs 82 from Rs 85 and maintained its Sell rating, despite healthy AUM growth and strong traction in lease rental discounting (LRD) and loans against property (LAP).
The brokerage noted that disbursement growth remained robust year-on-year, although sequential growth softened amid moderation in core housing demand. Net interest margins remained largely stable as lower funding costs offset yield pressure in the prime housing segment.
Citi expects some margin pressure ahead and highlighted increasing competition in prime housing as a key overhang. It also flagged elevated employee costs over the next year as the company continues investing in Sambhav, its affordable housing business, and expanding its distribution network.
The proposed insurance commission regulations are another risk. If implemented as proposed, they could reduce profit before tax by 6–7%, according to the brokerage.
Citi noted that Sambhav is scaling rapidly and emerging as a key growth driver, with the shift towards LRD and Sambhav supporting the overall growth mix. Management has retained its 21–23% AUM growth guidance.
HSBC Maintains Reduce With Rs 76 Target
HSBC retained its Reduce rating on Bajaj Housing Finance with a target price of Rs 76. The brokerage said the company's profit beat estimates, driven by better-than-expected net interest margins.
AUM growth remained healthy, supported by LRD, LAP and affordable housing loans. Net interest margins improved sequentially as borrowing costs declined.
However, HSBC expects margin compression in FY27 as funding costs rise and portfolio mix changes. The brokerage also expects employee costs to remain elevated as the company invests in distribution and expansion.
Sambhav's affordable housing portfolio is expected to become a meaningful contributor to AUM, but the proposed insurance commission regulations could weigh on fee income if implemented.
Emkay Retains Add, Sees Rs 85 Target
Emkay retained its Add rating on Bajaj Housing Finance with a September 2027 target price of Rs 85, valuing the company at 2.4 times estimated FY28 price-to-book value.
The brokerage highlighted 25% AUM growth, 18% profit growth and return on assets and return on equity of 2.2% and 12.7%, respectively. Asset quality remained robust, with gross Stage 3 assets at 0.29%, net Stage 3 assets at 0.12% and credit costs at 10 basis points.
Net interest margin remained broadly stable at 3.7% sequentially, as an approximately 17-basis-point decline in cost of funds offset around 10 basis points of yield compression.
Management retained its guidance for 21–23% AUM growth and a return on assets of 2.1–2.3%. Following the recent repo rate hike, Bajaj Housing Finance raised its prime lending rate by 15 basis points. Emkay cautioned that higher balance transfers could remain a risk in prime housing if banks do not adequately pass on the rate increase.
The brokerage expects faster growth in Sambhav, the higher-yielding affordable housing business, to partly cushion margin pressure. Sambhav is targeted to account for around 20% of home-loan originations by the end of the year.
Emkay also flagged the proposed insurance commission norms, which could have a 6–7% impact on profit before tax if the draft is implemented in its current form. After factoring in the quarter's performance and management commentary, it marginally adjusted its estimates while leaving core earnings largely unchanged.
What To Watch In The Coming Quarters
The key monitorables for Bajaj Housing Finance are the trajectory of net interest margins as funding costs rise, growth in prime housing demand, the contribution of Sambhav and the impact of any changes to insurance commission regulations.
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