Bajaj Housing Finance Limited (BAJAJHFL) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Bajaj Housing Finance Ltd. Q3 F526 Earnings Conference Call hosted by IIFL Capital Services Ltd. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. And now in the conference, go to Mr. Viral Shah from IFL Capital Services. Thank you, and over to you, Mr. Shah.

Thank you, Nirav. Good evening, everyone. This is Viral Shah from IFL Capital. Welcome to the 3Q F526 Earnings Conference Call of Bajaj Housing Finance Ltd. On behalf of IFL Capital, I would like to thank the management of Bajaj Housing Finance Thank you for giving us this opportunity to host the call. From the management team today, we have Mr. Atul Jain, Managing Director, Mr. Gaurav Kalani, Chief Financial Officer, and other senior members of the management team. We will have opening comments from the management team, post which we will open the floor for Q&A. With that, I would like to transfer the call to Atul for his opening remarks. Over to you, sir.

Thank you, Viral and IFPL team for hosting today's concord. Good evening to all the participants. Investor deck for Q3 has been uploaded on our company's website under the investor section and also on both the stock exchanges. I hope you had a chance to go through the same. Me and my colleagues here are here to first take you past the important features of the deck and then subsequently to answer any questions you have on the deck. I will quickly cover important panels of the investor duck. First, I will start with panel number C. Overall, a good quarter for AUM and profitability. AUM stood at 1.33 lakh crore, growing 23% on via-via basis due to continued good momentum in disbursements during the quarter, which were partially offset by higher attrition. Packed due 21% with annualized ROE of 2.3% and ROE of 12.3%. Asset quality remained healthy during the quarter with GNPI at 27 bps, NNPI at 11 bps, and annualized credit cost of 19 bps. Operating efficiency as well improved during the quarter, leading to OPEX to NPI at 19%. This 19% is excluding one-time exception item, against 19.8% in the same quarter last year. The company's geographical coverage stood at 221 branches across 178 locations. The company also continues to have compatible capital advocacy with power at 23.15% and PPC for the company, which is a regulatory criteria, stood at 61.37% from a threshold of 60% as per regulation. I'll move to the next panel. and DF at 11.6%. Disbursements during the quarter reflected good momentum with growth of 32% on Y-O-Y basis from 12,571 crore in Q3-FI25 to 16,545 crore in the quarter gone by. I am moving to the next panel, which is panel number 5. Cost of funds improved by 50 beats on Y-O-Y basis from 7.9% in Q3-FI25 to 7.3% in Q3-FI26. On sequential basis, COF modulated by 5 BIPs due to policy rate transmission on existing warring and also impact of incremental warrings at lower rate. Warring mix continued to remain well diversified with higher composition of money market instruments. Warring composition was 52% from money market, 39% from banks, and 9% from NHB refiners. Gross spreads overall modulated by 12 BIPs sequentially from 1.9% in Q2, FI26 to 1.8% in Q3. This was due to portfolio yield reduction of 17 bps, which got partially offset by 5 bps benefiting cost. Threads for Q2-FI26 had expanded to 1.9% from 1.8% in Q1-FI26 and Q4-FI25, and you will recollect during last quarter we had called out that the margins have expanded due to delayed transmission in part of the portfolio while the cost of funds benefit was up fronted. So, in that sense, Q3 became as a normalized checker spread of 1.8%, which was in line with the previous two quarters before Q2. However, from a YOI basis, this was lower. Net interest margin held at 4% in Q3 FI 26, while remaining flat on sequential as well as on YOI basis. OPEX to NTA, which was covered in the initial panel, was improved to 19%. Exceptional item was of 13.1 crore due to one-time impact of gratitude provision pursuant to implementation of labor courts. I'll move to panel number 6. Healthy asset quality during the quarter with GNPA 27 beeps in QC against 26 beeps in Q2. NNPA improvement of 1 beeps on sequential basis from 12 beeps to 11 beeps. Credit cost annualized was 19 bps during the quarter compared to 15 bps in QCFI25. However, in QCFI25, we had a one-time overlay release of 10 crores. Factoring that, the credit cost would have been 20 bps in last year, so 19 bps versus 20 bps last year. Quarterly pact has grown 21% from 548 crores to 665 crores. Annualized ROA stood at 2.3% against 2.4% last year, same quarter, But in line with sequential 2.3% in the previous quarter, and ROE at 12.3% compared to 11.5% in QCFI25. Overall net worth of the company was a bit tad below 22,000 code at 21,838 code as of 31st December 25. I will now straight jump to panel number 19, which is both a quarterly snapshot as well as a nine-month YGD snapshot. Majority of the quarterly metrics have already been covered on the previous panel. NIM for Q3, FI26 has grown by 19% to 963, while NTI has grown 24% on a YOY basis. This is due to higher assignment income and fees and commission income. Both PBT and PAT has grown by 21%. On a nine-monthly basis, net total income has grew by 24%, operating expenses increased by 20%, and PPOP, pre-provision operating profit, has grown by 24%. Overall, PAT has grown 20% for 9 months FI26. Opics to NTI on a year-to-year basis up to YGD basis has moderated by 50 beeps to 19.9% from 20.4% in 9 months FI25. Credit cost is 18 beeps in 9 months FI26 against 8 beeps in 9 months FI25 because of an overlay release of 60 crores in 9 months of last year. Adjusted for that, it is largely flat. ROA was 2.3% and ROA was 12% in 9 months, FY26. I'll move to panel number 21. As discussed earlier, portfolio yield dropped by 17 bips on sequential basis from 9.3% to 9.1%, while cost of fund saw sequential benefit of 5 bips to 7.3%. Whereby, growth spread has contracted by 12 bips to 1.8%, but similar to Q1 and also Q4 of last year level. OPEX to NDA is dropped by ATBs to 19.8%. NIM flat at 4% on wire-wide as well as sequential. Asset quality trend and portfolio metrics have already been discussed on previous panels. I'll move to next panel. Well-diversified boring mix. This is enabled through boring relationship with 18 banks and highest possible credit rating of AAA stable. In terms of sequential movement in boring mix, bank boring mix has increased by 2.8%, While NCB mix has moderated by 70 bits, CP mix has come down by 1.6% and NHB refinance by 40 bits. Moving to panel number 25, portfolio mix remains well-diversified basis over guidance range. On sequential movement, LID and lab share has increased by 40 bits each, while moderation and home loan share by 60 bits and construction finance by 20 bits. I'll move to next panel. Now, this is a panel we are introducing for the first time. This is an additional panel because this is giving an update on our SBU, which we set up around one and a half year back for Sambhav loans, which are for near-time and affordable, to expand both customer segment for the company as well as enhanced yields for the company. Now, currently, this business, close to 18 months of operation, has reached a level of a monthly disbursal run date of 325 to 350-odd crores. As a company, we are targeting 600 crore plus monthly disbursement run rate in the next 12 to 15 months through strategic investment being made in this SBU. Sambhav loan has two parts. Now, because then what we call as a Sambhav loan in SBU has two parts. One is a near-prime, second is an affordable. Under near-prime business, we target average ticket size of 40 to 60 lakhs, having yield in corridor of 9 to 11 percent, with focus on top 36 market. For affordable, we target average ticket size of 15 to 35 lakh with yield ranging between 11 to 13 percent and operating in deeper geographies of top 36 market, that is the outskirts of the main cities, as well as tier 4 and a rural location. In terms of a geographical coverage, now this business is now operating from 73 urban locations and 72 tier 4 stroke rural locations. Under Sumbab Loans, we offer loans for all transactions in home loan, which is whether purchase, resale, self-construction, and balance transfer. We have also deployed dedicated teams for separate type of channels in this business, which is intermediary sourcing is B2C team. At a developer counter, we are deploying B2B teams, dedicated D2 teams, as well as their direct-to-consumer teams and the loan-against-property team. I will now move to panel number 33, which is the last panel I would like to cover. Provisioning coverage ratio remained healthy and was higher than 50% across product lines. Home loan GNPA inched up by 2 bips on sequential basis to 34 bips. Lab GNPA improved by 7 bips to 52 bips, while DNPA was flat as of Q3, FA26. Overall NPA improvement by 1 bips, including flat NPA in home loan, while Lab and NPAs improved by 5 bips to 24 bips. That's all from my side on quarter of the day. Happy to take questions now between me and the management team.

Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question is assembled.

Participants, you may press star and 1 to ask the question. First question is from line of Abhishek from HSBC.

Please go ahead.

Hi, Atul. Hi, Gaurab. Thanks for taking my question. So, a few quick ones. One is Tier 1. Why has it declined so sharply? Even if I add back the profits, it would be about 70, 80 bits, you know, so the drop at about 3% QOQ is very sharp. So can you talk about that? And also on a, I mean, yeah, so basically this quarter's tier one drop, that's point number one. Point number two, when you're giving this medium-term outlook on cost to income, what is the time frame? Because even if I assume something like three years, the OPEX growth will work out to around 9% if the revenue growth is somewhere around 20%. So that looks quite low or is that possible given all the AI intervention, etc. that you are doing? So that's question number two. Question number three is if you can share the BT in and BT out in home loans for the quarter. That would be very useful. Thanks. I think those were my questions.

Thanks, Abishit. Your first part of the question, Tier 1 decline, that is in November, there had been a consolidation of applicable guidelines by Reserve Bank of India when they came out with a consolidated circular. There has been a minor change which we are seeing in that guidance as they consolidated the guidance because there was an illustration given for under-construction home loans and the developer loans in the erstwhile guidance, which allowed the provisioning for an undisbursed franchise of home loan or undisbursed franchise of a construction finance for provision of capital only up to the next stage of disbursor. Now, by the violation of the guidelines, this example has been removed. Now, on a conservative basis, then we have provided capital for the entire chunk of undisbursed loans in both home loans as well as the construction finance loans rather than only up to the next tranche available till we have a much more clarity. So, that is where you are seeing the sharper drop in the Tier 1 for provisioning of entire undisbursed tranches of home loan and construction finance loans in the current quarter. That's where the drop in the Tier 1 you are seeing.

Can I just ask a clarification? When will this clarification come from the regulator? Because this means that all the incremental disbursements that you do, even in that or the undisbursed part, sorry, the sanctions that you do, the undisbursed part will still attract a capital charge. So how do you, will this mean faster capital consumption? Sure.

Yeah. So this will be at the point of a time, because this is only applicable on the under construction home loan. We have a reasonable size there. So as the volume growth, the built up of the undisbursed portions will be lower because the older portions keep on getting disbursed. But to the point what you are making, till the point of a time, there is a regulatory clarity or the provision. We have to provide for that because the illustration was the basis for providing till the next tranche. But that illustration, with illustration one, we have to provide for, as a guideline stand, as it is, we have to factor in as a conservative basis and factor in all the entire capital. But we hope for the regulatory clarity or a question at an early date. But pending that, we will continue to provide for entire capital on all new loans also being dispersed.

Understood.

The second part of the question was cost to income ratio. The time frame we take a 3 to 4 year to 14 to 15 percent. Now, this is, OPEX growth can be a bit higher because as we will continue to invest, what we call in the sum of loans, next two years, three years, we will continue to invest in our sum of loan unit much more, even in fact, we will accelerate our investment next year in the sum of loans to gain scale much more rapidly in the near payment of the affordable space. So, this is, now, if you look at a year-on-year, it has dropped from 20.75% to 19%, almost a drop of 1.75% over the last 4-5 quarters on a quarter-on-quarter basis, at an absolute basis. When you see that, this is despite the currently declining interest rate scenario, which compresses the margin, which compresses the margin. So, we remain very, our path that we have chucked out, that 15-16%, 14-15% would be feasible to deliver in the next 3-4 years. In the path of movement, what we are doing will be sufficient for us to reach that level. On a BT in and BT out, I will request Gaurav to give. For the last quarter, it was 16.5% of our total home loan acquisition. BT out on the portfolio is 16.9%.

No, okay. BT out is... Okay.

No, no, sir. BT out is about 20%. BT out, Gaurav, is informing me, it's close to 20%. BT in is 16.5% of home loan acquisition for the last quarter.

And compared to industry level, BT, would you have that number also?

I, at a normal basis in BT in an industry used to be 15% of the total home loan disbursement. So we are in line with that. But however, my own personal assessment is that has gone up in last two quarters specifically because the kind of a, but that's an impression or a, what you can say, assessment we have. This is our data, whatever the published data previously will have on the composition of the home loan industry, it used to be 15% used to be beating. But my own suspicion is last two, three quarters, it is much more elevated because of our rate cut pressure from our public sector banks. It's my own assessment of the market.

Okay. And quick data point, Sambhav loans, what is the AUM?

AUM is close to now 5,900 odd crores.

Both near prime and affordable.

Sorry, just a minute, 5,000 plus odd.

Yeah, both near prime and affordable work together. Okay. Got it. Thank you, and I'll come back in the queue for more. Thank you very much.

Thank you. Next question is from Lanoff, a branch from Mishra, from Phillip Capital. Please, go ahead.

Hi, Atul. Hi, Gaurav. Thanks for the opportunity. So, I just want to understand what is our prepayment rate, which would include the BT out, plus there would be foreclosures. There will be people who want top-ups, and there will be people who will be fighting for rates. So if we can split this into these four broad categories. The second is how many people do we bank on a monthly basis, as in the match hitting their bank accounts on a monthly basis. The third question is around liabilities today. What of our borrowings are on floating, and what do we think about the cost of funds going forward in the next year? Thanks.

Hi, Shubhraanshu. On the prepayment rate, total cumulatively, what I called out in the last question is 20%. Now, this is a mix of a part payment being done by the customer, the natural attrition, what happens, and also the BT out. Well, largely you can take 60-70% of it as a BT, and balance be the natural attrition what the customer does, or for 20% kind of a rendered, 20% rendered. So 14-15% you can take as a BT, and 5-5% would be the natural attrition plus the part payment. On the banking numbers, I'll check and come back to you by the time, because the ZEC number, my mix is close to, I think, 300,000-odd customer would be there. But I'll just validate that. On the fixed and the floating mix, if you look at an AUM, we are at a 60% floating. On an AR, floating will be 52. So that's because we look at, when we look at a liabilities, we look at AUM because there is a balance sheet which is there, which is assigned out. So floating is 60% at AUM, around 52% on AR base.

Just one clarification on this BT out. So, if there are 100 applications which say that, okay, I want to transfer my file, how many are we able to retain back?

Roughly 40% of the applications eventually move out in 90 days period.

Okay. And this versus the industry in the same ticket sizes in prime segment would be how much?

There is no industry data which gets published on this basis on the ticket size and on attrition basis, retention or attrition basis. So, I will not be able to comment on whether it is high or low. But given that we are in the prime segment, I suspect our attrition rates would be higher than the industry. Our banking numbers are 3.3 lakh. I said approximately 300,000, so it's 3.3 lakh.

And what do you think of cost of funds in 27?

It's a very difficult question if you are asking today because Q4 is very difficult. Vijay is here from a treasurer. 25 to 30 is kind of a downward revision we are looking at for a full year level. It's an assessment as of today, but given the current, whatever has happened in the last 30, 35 days in the market, and specifically in the money market side where the money prices have gone up. But we assume that till March, from April, things should get back to normal.

Sorry, you think 25 BIPs of cost of funds will reduce despite the GSEC yield hardening?

No, so I am saying that the GSEC yield hardening is we are taking it as a till March phenomenon because of the liquidity crunch in the market. From April, we expect the market to be normalized because basis today, if you look at a mini market today, then we are not talking about any savings there. But our reasonable estimate is the next year there should be a 20% kind of. Because there is a repricing of the existing warrants. Also, because there is an existing warrants, maturity, which were done slightly at a higher rate, which will get replaced. Even if the markets don't come back to a very low level, there is some gain which will come from the level what you are currently warrants. Because currently what we are warrants, the incremental warrants, are cheaper than the cost of funds at the book level what we have, even in the current scenario as well. So, that's what we'll give our savings as we go forward.

Understood. Thank you so much. I'll come back in the queue. Best of luck.

Thank you. Next question is from Abhijit Ibrahimovic from Uthilal Oswal. Please go ahead.

Yeah. Good evening, sir. Just two questions. Thank you for taking the question.

Abhijit, can you speak a bit clearer or near the mic?

Is it better now? Yes, thank you. Yeah, so just two questions. Firstly, if you could just comment a little bit on the competitive intensity. Now, why I ask this is this quarter, at least based on the commentaries that we have heard until now, everyone is talking about a significantly elevated competitive intensity and primarily coming from banks, within banks, PSUs. Now, I understand we've been talking about this competitive intensities for the last couple of quarters, but just trying to understand, I mean, And has it got much more pronounced in the last maybe two, three months? And within that, I mean, is the competition only pronounced in the prime and super prime segments? Or are you also starting to see this competitive intensity go up in the near prime and affordable segments? That is my first question. The second one is around the PLR changes that you've done. So, if you could just help us understand that last quarter in the month of January, what PLR changes have we done, and how are we thinking about any further PLR changes over the next two months of this quarter. And lastly, this quarter we've done slightly higher disbursements. So, how are we thinking about it? Is there an annual disbursement volume that we work with or is it like more opportunistic based on you using it as a liability tool? So, whenever opportunities arise, you go ahead and do the same. Just those three questions.

Thanks, Abhijit. So, Abhijit, first on the competitive intensity, we have called out during last quarter as well. We feel the competitive intensity is a feature, not a novelty in the market. That is what I stated in Q1 and Q2 as well. So, there will be the pressure on the prime side and the super prime because that is our major part of our business will always be high is what we work with the base case assumption. It remains as pronounced as it was, and we believe it is likely to remain like that. So our plans factor in a high level of competitive intensity, continuing, because there will be, at a point of a time, there will be some banks who will be very aggressive. At a point of a time, there will be other banks still very aggressive. Largely competitive intensity from the banks on the pricing side remains on the prime and super prime side. On the near-crime or affordable side, it is not the pricing intensity, but the number of players present and the number of players wanting to make more space there, which is increasing, but the pricing intensity is not seen as a competitive manifestation there. On the PLR change, we have done a total, so there are various parts of our books. One is a book which is an external benchmark link. There it is passed on in line with the benchmark, which is close to 10-12% of our book is linked to record rate. There the book is passed on, the record rate benefits are passed on as per the external benchmark. On the non-reporate link book, which is our salaried book in the prime side, what we have passed on till now from a rate cut cycle from March is 60 bits. So January, I am not clear. So this January, I don't. So February onward, ever since the rate cut cycle in line with each rate cut, like this last rate cut which had happened, we had passed on in December. So, January, we have not, there is no other further rate cuts. So, 50 dips of a pass-through has happened. And we don't see as of now any basis, the market conditions as of now. That is, of course, subject to, I am assuming there is no rate cut coming in the upcoming.

Just one follow-up based on this, the first question, the tier one that you explained, right? Why the decline? So I was just trying to understand if my understanding is right. Now what we have done is on the sanctioned amounts as well, we have taken a capital charge and till better clarity comes. But the problem here is until now, right, as an industry, we are never used to provide on the sanctioned amounts, right? Why you said that over the course of time, those sanctions will convert into disbursements. But until the time clarity emerges, people will shy away from giving higher sanctions, right? Because that eventually means that even without disbursing, you are having to take a capital charge.

No, so this is not linked to that, Abhijit. This is not sanctioned amount. We are sanctioned amount. In any case, you have to factor in some as a part of a credit conversion factor in your disbursements. And that's only for a temporary period of 30-60 days, which in any case keeps on going on a rotating basis. This is on an under-construction home loan or under-construction project finance. You have disbursed one tranche because you have to disbursed first tranche, but that the money keeps on going over a period of 24-36 months in tranches which are linked to the construction. So you have to sanction the full amount. You have to disbursed the first tranche because that's how you will disbursed the final money. So, there is no escape from not sanctioning, because you are disbursing when you are providing food.

Got it. This is useful. Thank you so much, and I wish you and your team the very best.

Thank you. Next question is from line of Chirayu Malu from Kodak Institutional Equities. Please, go ahead.

Yeah, hi. Thanks for taking my question. Most of my questions are already been answered. I just have one from my end. So, can you please share how your NIMs will trend going forward, and what will be the impact on margins, assuming that long-term needs will remain elevated?

Yeah, hi. Hi, Chirayu. So, for the current year, we have already guided for NIM movements and NTI movements, etc. So, for the year, while we had said that we'll be able to maintain the NIIs in line with last year, NPI at an overall level, we are looking at around 15 basis points to 20 basis points off drop there for the entire year. So, that's what we had guided at the start of the year.

Okay, thank you.

Thank you. Next question is from Iral Shah from AFL Capital Services. Please go ahead.

Yeah, thank you. Atul, I have two questions. One is, do you have any, say, targets with regards to how big the near-prime and affordable segment could be, say, maybe three years down the line? And secondly, even this 325-350 crores of 1.3 origination that we are doing in this business, can you let us know what percentage of this is, say, a crash origination versus, say, a BT in, and who would be the typical competitors for us in the market?

Thank you. That next 12 months to 15 months, we will be looking to nearly double the kind of a disbursement rate. Thereon, it is a business which is evolving. Space is large, reasonably large. We will continue to evolve. Next three years, we see ourselves having a significant amount of investments continuing in this business, which is near time and affordable for us to keep on growing. So 36 months from here, it will be an investment phase. So you can assume that we will be looking We are starting to grow the business significantly, aggressively over the next two to three years. On the, what you asked for a BT mix in this, in this the BT is close to 27 to 30 odd percent in the acquisition, what is there? Rest is the purchase or resale or a plot plus construction, P plus C, which is an affordable, which is a typical there, P plus C, builder or a resale. BT in is 27 to 30 odd percent.

And, Atul, if the competitors, if you can give some sense over here, from where we are getting this BT?

The business will get BT from, even it can get a BT from a bank as well. So, there is no particular person which is targeted because it depends upon the customer need, what is getting met. The customer can be looking for a top-up, which loan was earlier, but largely, if you are looking to see that are the BT in customers coming more from affordable, no, that is not the case. It is a mix of affordable HSCs to even banks to prime companies as well, where a customer can be coming in. See, the yield is between 9% to 11%. That's what we are calling about, and the yield in some cases can be even. So, yield is not that dramatically different for a customer to be only coming from a – deep down the line from an affordable segment. It's a mix of a segment.

Got it. Thank you.

Thank you. Next question is from the line of Raghav from Ambit Capital. Please, go ahead.

Hi. Grazing and thanks for the opportunity. I think you've partly answered my question, but I should go ahead. You mentioned that you'll be scaling up the affordable home loans where ticket sizes 15 to 35 lakhs. I think you are also saying that you are targeting some 600 crores of disbursements over the next 12 to 18 months. My first question is what percentage of this 600 crore target will come from the 15 to 35 lakh segment?

As of today, from what we do within near time, if my numbers are correct, I think 35-40% comes at an aggregate level between 15 to 35 lakh. But I'll have to come back to you for the exact numbers, because my assessment is close to 100, 25, 130 odd code comes in that segment, and balance comes from the higher than 35, which is a near-end segment. Okay. You said 125, 250 from 50 to 35. 35% of a 350 odd code monthly number comes from a portable segment, balance comes from the near-end segment.

Okay. And then your sourcing strategy in this will, so I think you partly answered that, that 27 to 30% comes from DT in, which is where you're acquiring from the other affordable HFCs. And yes, is your own team, your own sourcing team?

Yeah, even for balance transfer, you have to have your own sourcing team because customer will not walk in. But it's a mix of a strategy between balance transfer and the market facing. We have four types of sourcing teams what we are deploying or what we have deployed at a subscale, but finally there is an internal data team, data and the digital lead processing team where the larger business composition is towards the balance transfer. There is There is a market intermediary focus team. There is a builder counter sourcing team because there is a fresh purchase also of a sub 40 lakh, sub 45 lakh ticket sizes which is getting done. That is where it is sourcing. Then we are also deployed a dedicated lab team for this segment as well. So there are four dedicated teams which have been deployed to procure this business. The BP is a mix of a business which comes in largely through the direct channel,

Somewhat also through a market intermediary facing. And this 35%, which is affordable, will this increase or should we assume that this will remain as it is after the 540% of the 600 crore disbursements that you are targeting?

In the short run, the percentage should remain the same, but as we go further forward from here, the percentage should increase. I'll say short run means next 6 to 12 months, you should assume the percentage remaining that's similar, what we're talking about. But as we go forward from there, the percentage would increase towards the affordable because that is where what, as per our plan for next three years, that's what we're planning for.

Understood.

And any, you know, guidance as to what percentage?

This can increase too from 35%, maybe 50% or higher?

Is that something We will evolve. Next 12 months, 15 months, we have answered. We will evolve. It will depend upon how do we experience the customer. See, we are putting up this guidance or the update on the SVU which we settled around 18 months back because 18 months back we started. Because we at that time also said that as we gain experience, as we get more comfortable, we will be able to take much more clearer stance and inform. Today, 18 months down the line, we are much more confident. That's why we are taking a view for next 12 to 15 months and a bigger, longer-term view. But the mix will continue to evolve. This is the market opportunities as well as our experience, as well as what we want to do. So I'll desist from giving a guidance too far forward. That's the next 12 months, 15 months of the mix. Our guidance is there. The rest will remain available to, in cash, any opportunity available in the market, it is there. So we are not guided by opportunities of the mix.

Fair enough. My last question, you know, based on your assessment so far for the affordable housing finance segment, I'm not sure if you've done these calculations, but what percentage of your targeted locations overlap with areas where existing HSEs, affordable HSEs are already operating? Is that something that you would have done?

So, all the markets will be common only, Raghav. There is no differential in the market. The catchment areas of affordable housing will remain same for any other HFC or for us. They are not going to differ significantly. And differ only if we go to, let us say, multi-multi-year down the line. We are going very, very deep geo, then it is there. As of now, for us, next two, three years, we will remain largely wherever most of the companies are there.

No, maybe if you were to go, you know, district-wise, maybe there would be districts where you don't have as many number of portable HFTs and some districts where, you know, the market is either oversupplied or fairly, you know, well-supplied. I was just trying to understand some clever on that, but, yeah, I mean, you have

to assume for the next one or two-year, it will be largely the market where most of the players are available, because that's how two-year was started there, Top 36 markets outskirts are where all the companies are there, from where the major part of this volume is coming in, and that's likely to be there for the next one or two years, as till we look at, like I said, maybe by next year, then when we give a fresh flavor for one year down the line, two years down the line, we can give a more flavor. But as of now, you should assume it's the same number, same market.

Okay. That's a very clear answer. Thank you a lot.

Thank you. Next question is from the line of Sukrit Padil. From my side, Fintway, please go ahead.

Good evening to the team. I have two questions. My first question to Mr. Jain is, as housing finance market remains competitive, how does the management think about balancing growth opportunities with underwriting disciplines across core products like home loans and LAP? What changes in borrower behavior or portfolio performance would prompt a difficult internal? I'll ask my second question.

If I understood your question, you are asking one, how do we balance risk-return equation across products? That is, I think, the spirit behind the question, what you are asking. See, we run an active management strategy, active risk management strategy. The products, what we do are, now all products have their different roles. Within home loan as well, the prime has a different role, and a near prime or a non-prime has a different role, then affordable has a different role. It is matched by the opportunity, risk emanating from it, costs associated with it, and the return. Now, at a point of a time, as the management, what we look at is, we are a low risk at a broad level. Our strategy construct is we are a low risk company, which is what is reflected in our risk performance over the years as well in the portfolio. So, our anchor product remains always a low risk, which is a prime housing as well as a lease rental discounting. There we always take, there we believe that kind of portfolio what we acquire is a above pristine or at a pristine level portfolio which helps us to maintain our overall risk performance of the company. At the point of a time, if a product is a risk challenge or a return challenge, I'm bringing in a question of you, you were asking a question from the risk challenge point of view, I'm bringing in a aspect of you on a return challenge. There can be a relative weight which shifts from one product line to another product line, but there is no conversation which will, as a management will do, saying that a risk threshold breach is acceptable in a product. There is a risk threshold for each product construct, and each product has a particular role in the overall company construct as a percentage of the company area, so that overall at an aggregate level, we can deliver a lower risk and a medium return company what we stand for. It was a theoretical question, and I think I have given a theoretical answer, but I hope you would have.

It's a very good answer. My second question to Mr. Kallan is, along the similar lines only, beyond the reported asset quality and capital metrics, what are the key early indicators you track internally, such as customer repayment patterns, portfolio assessment, or funding behavior that help you affect credit risk and balance sheet health ahead of what shows up on the news? I want to understand our view on this, how you handle this particular.

Yes, so predominantly we look at a few metrics internally like the bounce rates, how are they moving, stage-wise asset movement, how is it happening, etc. And that's why we also published some of them in the presentation. If you look at the stage 2, which is the early indicator, so the first indicator would be the bounce rate, The second indicator would be stage two, and then getting into the stage three side. So stage two, if you look at, has pretty much remained in that 35 to 40 blips corridor. That gives us that comfort that overall across the couple of years, recency-wise also, we are pretty much okay on the asset quality side. Thank you, and best of luck for that. As we have discussed already, Sukrit, so repayment rates over the last one, one and a half years have remained high. This year specifically have remained elevated, not just for us, at an industry level, home loans overall, if you see, whatever results have come this quarter also, if you see, 18 to 20 percent is the repayment rate across the industry, which you would see. For us also, it's there in that corridor, around 20 percent rate. We have been sensing it over the last three quarters and have already factored that in while we gave our guidance in the Q1, along with the Q1 result.

Thank you, and best of luck for the next quarter.

Thank you. Next question is from line of Omkar Kamtekar from Ascendancy Capital. Please go ahead.

Thank you for the opportunity. With respect to the speed that you mentioned for the disbursement, 35% odds, is that the same that will translate to the AUM? AUM, I believe you mentioned approximately 5,000 odd crores.

Sorry, I could not. The disbursement growth of 32%, will it translate similarly on the AUM side?

So, both are different denominators, Mankar, because a balance sheet denominator is different and a disbursement denominator is different. Then there is a factor of attrition also which comes. So, it would not be in sync. It would be different, whether disbursement basis is different and growth, EM growth. That's why 32% disbursement growth, you are seeing 23% EM growth. And going forward also, there may or may not be a correlation on both the numbers.

Not growth. The split, so 35% of the 350 crores is affordable. So, is that split also applicable on the AUM? So, how much of the AUM of the 5,000 crores?

But in year prime and affordable, the investment would buy and have translated into the same split in the UEM group. Because it's a newer portfolio.

Understood, understood, understood. And because it's relatively new, so I think you barely would have any specific data with respect to any credit cost in this particular book or asset quality movements. But overall, what you are seeing, say, one year or two years down the line, because I think generally in this kind of a book, you see, you know, first building pitches coming after, you know, 24 months or, you know, down that line. How do you see it in that perspective? And what is your, how is the growth in your prime, super prime, near prime, affordable, all these four?

What you asked on the delinquency metric, yes, while the delinquency comes later, but the early indicators which start becoming visible, which is a bounce rate metric, we are the first round, what we would have booked will be 18 months or 18 MOB. So we are seeing, we are reasonably confident on seeing the performance. That's what we had called out last year, that we first see the early performance because we were new in this business, and then this is that we will take a decision to scale. Now, when we are giving an update in the current quarter, when we have taken a decision to scale it much more rapidly, we feel that that is an indicator, saying that our early, of all the early metrics is giving us a comfort to rapidly expand this portfolio. The second question I could not understand fully. So, what is the volume growth?

So, what is the approximate volume growth? Because what, you know, looking at some of the results in the cautious on the volume growth, some were optimistic on the volume growth in the specific segment. So, some of the affordable housing companies were volume growth in each of the segments. The near prime, affordable, super prime, prime. Even the housing prices index that can be seen on the NFB side. We look at the volume growth in each of these segments.

So, like we have called out near prime and affordable, we are looking to close to double the run rate in next 12 to 15 months. So, in both the segments and if the mix will remain 35-65 only between affordable and near prime, very clearly you can deduce from there saying that we are highly optimistic of volume growth in near prime and affordable segments as we grow from 12 to 15 months from here. That's based on, because we are newer in this segment and we are in an investment mode phase. That's what gives us the confidence and this is our, because our size is comparatively lower in the market. As far as the prime segment or the super prime segment is concerned, to a certain extent, it is linked to the market this business growth as well. But we have been growing our business there. Our structures have become upwards in these segments over the last one, one and a half years, as we got new home loan leadership team on board, which is led by Jasminder for us for last 18 months back. And we remain very confident of our continuing volume growth there as well, while the volume growth there in the prime and super prime segments will, to a certain extent, be linked with the market growth as well. Because where we are not upstart, we are present in a reasonable level in the market, specifically in the top six markets, their volume growth will be driven more by non-top six markets, as well as in the top six markets, somewhat linked to the market growth. But net-net, in all the four segments for the short period, which is next 12 to 18 months, we remain positive and optimistic on the volume growth in all the segments, whether prime, super prime, affordable or near prime.

Just one data-keeping question on the ratios. So, in this number of housing review, the sanction ratios or the disbursement ratios, so like if 100 cases come to you, how much would go to sanction and how much would go to disbursement, like a waterfall for the, so far, whatever, in the 18 months that you have seen?

It is difficult, but at a broad level, 55-60% would get sanctioned, and out of that, 70-75% would get disbursed, but it will vary between various segments. Near-time can be very different, near-time can be very different, but at a broad level, 55-60% would get sanctioned out of 100 cases which are logged in in the system, and 75% would get disbursed out of the full case.

The Cypher size currently is low, so that was great. On the rate, yields, affordable, you're saying it's 11 to 13. I mean, is this on the lower end or do you think that you can push this higher? Because among the affordable HSTs that are listed, they are at the upper end of this scale that you're saying. And, I mean, so, do you think that we will be using our benefits and the cost and trying to, you know, gain market share via undercutting them or this is like a conscious or this is just an indicative market?

9-10% goes up to 16-17%. So, when you see a blended rate, it will be a mix of a business starting from 10% going up to 16-17%. Now, there are various segmentations within the affordable. Since we are new in affordable, we have started the business not very long Welcome back. We are right now towards the upper end of the affordable segment, which is a segment, in the segment we operate in, this is the rate that is operated by most of the companies. There is no price positioning to gain market share because the size of the market versus what we are doing is relatively, we are, like in affordable, there is a formal segment which is at a better price range. We are more present in the formal segment rather than the informal segment. So segment-wise, the price varies. In the same segment, we are more or less in line with all the other affordable players. But we don't operate in technically more down the line or a more different type of collateral assessment because we are yet learning the ropes. So, at this point of time, for next 12 to 15 months, we'll like to remain, or we like to concentrate only on the upper end of the codable segment. Maybe 12, 15, 18 months down the line, we'll try to explore that.

Fair enough, because I felt that the yield bracket was on the lower side. So, maybe we were doing this consciously to scale the book or something, it was something.

We have positioned ourselves towards the formal side rather than the informal side. That's why I'm using it. Understood.

Thank you. Thank you. Next question is from the man of Kunal Shah from Citigroup. Please go ahead.

Yeah. Hi. So most of the questions are answered. Just want to check a couple of things. Firstly, when you look at it in terms of the other income, so is it primarily from the assigned loans or is there something else, maybe 90 odd crores in future and almost like 133 crores for the nine months? So, is this because the name of book AUM is also going up during the quarter, yeah?

This is, so, 90 crore for the quarter is largely driven by the income of derecognized loans versus a QC FI 25, which was lower. But, however, for nine months comparison, it is almost the same levels of FI 25 to 26. Because there is a timing differential. Last year, I think quarter 1 and quarter 2 were heavier on the assignment. This year, quarter 3 was heavier on assignment. So, on a year-on-year basis, the assignment income remains almost the same. But on a quarter-on-quarter basis, you are seeing a much more uptick in the current year.

So, in terms of the guidance, what you had suggested that there would be pressure on margins because of the lower reliance on assignment during this particular fiscal. Do we see, because I think there is a large chunk which is gained during this quarter, so do we expect that to continue even in the fourth quarter, and the impact on margins may not be so high?

So, there are two parts, Shrunal, why we do an assignment. One is an ALM match, which is where the assignment is there. However, we had called out in the Q1 saying that ALM match, not driven by ALM match, but we like to do a lower assignment for the year to leverage the capital position more. However, we had also called out because if there is an opportunity to grow more in the non-home loan segment to maintain our PPC criteria, we will not cap the business in the non-home loan, but then assign out. So for quarter three, we had to assign out or we followed the policy strategy of assigning non-home loans more because the home loan growth, as you have seen from an EUM, was 18% driven by much more higher attrition, but at overall part, we are going at 23%. Then we would have been in a problem in the PPC criteria. That's why we assigned more in the quarter 3. For quarter 4, depending upon the home loan growth versus the non-home loan growth opportunity, that will determine the assignment of strategy, whether we do less or more, will be more driven by a home loan AEM growth versus a non-home loan AEM growth factor.

Got it. And when we look at NTI for the first 9 months compared to last year's first 9 months, So, my calculation suggests that it's down by hardly like six odd business points, and we are still guiding for maybe names expected to moderate by 15 to 20 odd business points. So, what exactly is the number? So, if you can just highlight nine months name compared or maybe the NTI which you indicate in the guidance to F525 number, then nine months F525 number.

Yeah, so you're right, Kunal. As of now, we are trending in 4% corridor over the last eight quarters. I mean, 395 to 4% in that corridor. While we had guided for a full year, 15, 20 basis points, looking at the first two quarters, we had done lesser assignments considering how we see the attrition happening. And accordingly, we saw first two quarters at 24% growth. This quarter, we did a relatively higher assignment than what we had done in the initial two quarters. From here, looking at the full year, I believe 8 to 10 basis points of compression would still happen on the NTI level for the full year. I am talking of FI 25 versus FI 26.

Okay, so it would be 8 to 10 versus the guidance which was there of 15 to 20 which has been indicated. Okay, okay, so we have not revised that actually in the assessment for F526.

We will have to see how attrition plays out and also the acquisition. The attrition pressure continues and accordingly as we see the disbursement growth happening and the EUM growth, accordingly we will plan for assignment in the fourth quarter.

Got it, got it. But I would say maybe home loans as a category would any which way be growing relatively slower compared to that of LRD, LEP and the other segments. So maybe the reliance on assignment will still continue to be high given this kind of scenario of active competition. Or maybe you are seeing anything in particular in terms of the sanctions which is giving you the confidence that maybe still that assignment could continue to be low.

So, we are hoping for that our home loan teams will disburs far more than what they are disbursing, so they will grow much faster. So, that's what we are hoping for, but we are ready for a plan B, which is, if our non-home loan businesses continue to grow at the pace, which…

Then we will assign, yeah. Okay, got it. That's it, yeah.

Thank you. Thank you. Next question is from the line of Bobby J from Prunes Investments. Please go ahead.

Yeah, hello. On slide 17, you have your media term growth as 24 to 26 percent, and your FY26 as 21 to 23 percent. So what's going to change over the medium term, you think, given that the level of competitive intensity is expected to be high?

So, hi, Bobby. We had called out clearly when we gave a guidance for 21-23% for the current year versus the medium-term growth guidance. The medium-term growth guidance had two factors. One, at that point of a time, the basis of disbursements we were growing and the attrition which was there and our own strategy to keep on any market share in home loan. The medium-term guidance stand because that's what we believe we can deliver in the longer run or a medium run. That is also dependent upon what we said, the 12% to 14% kind of an industry growth. Now, 21% to 23% we guided lower for the current year because after the rate cut cycle started and specifically towards nearer to June, we saw a significant uptick in the attrition pressure which was led by largely balanced transfer routes to banks. Our assessment is, as the interest rate cycle gets normalized, which we had earlier estimated to get normalized by December or Jan of this year, because we were not factoring in another factor in November, which came, as the interest rate cycle gets stabilized, the attrition pressure will go down, and if we continue to maintain our disbursement growth, which is subject to industry continuity growth, 12 to 14 percent, which is the only delta factor what we have in our assessment, We believe we can go back to the medium-term guidance, what we have given. So that's the mathematics behind the medium-term to the current year.

The medium-term is what, 10 years or 5 years?

The medium-term we take 3 to 4 years, 4 years. You can take 3 to 4 years.

3 to 4 years. But you said that the competitive intensity was a feature of the industry, not really something that just happens for one year. So, despite that, you think you can grow at this rate?

Yeah. So, it will, when I say the feature of the market, yes, competitive pressure in terms of a pricing is a feature of the market, but the attrition pressures with time, when the rate stabilizes, see, there is a one is an acquisition, which is a feature acquisition pricing competitiveness, which is a feature of the market, which is what we factor and will always remain. However, the second factor, which is in a declining interest rate scenario, The same factor multiplies by triggering much more attrition. As the interest rate stabilizes, the second factor of a much higher attrition goes off, while the acquisition remains a feature. The novelty, it's not a novelty, it remains a feature. So that's how as the interest rate stabilizes, or maybe at a point of a time when they start going off, the attrition pressure comes down significantly, while for acquisition pressure remains same. So right now, today, we are experiencing both sides, acquisition pressure in the front end because of a pricing being a feature, not a novelty. But along with a declining interest rate scenario, it is triggering a much higher attrition pressure on the book.

Okay, I understand. And what percent of your loans did you disperse through a direct assignment this quarter? Sure.

Direct assignment. We assign out after acquisition. We don't do any co-lending in that sense. We don't disburse.

No, no. Not co-lending, but you directly sold the loans, right, rather than wait for the loans to mature.

Yeah, so that is assignment is in post-acquisition, which is largely of a non-home loan total of a 3,470 odd core loans got signed out during the quarter.

Oh, yeah, so that's what percent is that approximately?

For total balance sheet, this will be close to 2.5%. Total balance sheet is close to 2.5% of 1,33,000 crore. 3,500 crore would be 2.6% of the total balance sheet.

Okay, that's good. All right. Thank you very much.

Thank you. Next question is from Laino Sabranco Mishra from Philip Campbell. Please go ahead.

Hi, thanks for the opportunity. Again, two questions. I think there have been a couple of promotions within Bajaj Housing. Can you please introduce the broader team of new business heads now? Second is, how does the Sambhav distribution team or the sourcing team look like? Like how many front-end guys, how many credit guys, how many collection guys? If you can spell out that architecture. Great. Thanks.

There is no new change which has happened in the organization. The organization, the way it is structured, if you refer to our presentation, which is put up as a part of an investor, the company broadly operates in three verticals. One is a prime vertical. Prime vertical is headed by Disminder. As I called out and he was introduced in earlier calls as well. He used to be with ICCA for a long period of time. He leads our entire prime vertical, whether home loan or a lab. The entire sporting structure, enabling structure of the prime team is work with him to deliver the outcome, what is the volume. His role is volume, scale and low risk. That's what he is delivering for the company. Near Prime and Affordable is the second vertical for the company, which is what we started as a SBU 18 months back. Mr. Pavan Bansali, he leads that vertical. He has been leading the vertical ever since he started setting up this vertical. Again, the enabling functions work with him to deliver this. Third vertical of the company is commercial, which is headed by Wipin, Wipin Roda, who leads the commercial vertical, which incorporates both Wipin and Dushant Puddar, who heads our construction finance business, lead as an overall commercial vertical, leads into discounting and construction finance. So there are three verticals of the company at a business level.

And the second question on sum of loans, how does that…

So, if you are referring to some LinkedIn, that's a part of a normal progression, career progression beyond after a time there is somebody who gets upgraded or up there, but no goal change or no material goal change. Like, we keep on organizing and reorganizing our business. Recently, we reorganized our direct business entirely under one umbrella, but there is no org design change which has happened in the recent past. The second part of the question was on terms of a number of people differently in the print-end. As of today, because you asked for the DMS also in near time, elections, we run a horizontal structure, which is about DMS at a company-level structure, barring commercial, because commercial runs as a relationship level. Other than that, for the print-end.

Yeah, for sales team, for Sambhavi, around 600-odd employees are there.

So, almost close to 900 odd people.

Yeah, so that is on front end, direct including there is 900, and then followed by credit and operations team, which is, again, 150 odd people are there, and collection, as we said, right now, it is…

Thank you so much.

Thank you. Ladies and gentlemen, we will take one last question from the line of Omkar Kanthikar from Thank you for the follow-up.

Just one statistic, what was the individual housing union percentage of the total portfolio?

So, IHL as per definition of energy will be 50.7%. 50.7% as of 31st of Thank you very much.

And now I hand the conference over to Mr. Viral Shah for closing comments.

Thank you, Atul, Gaurav, and Bhadar Housing team. Atul, do you want to make any closing comments?

Thank you very much. On behalf of IISO Capital Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.