Synopsis: A routine debt disclosure carries a useful signal for shareholders tracking one of India’s largest housing finance companies, as the company allotted Rs. 2,500.85 crore of secured non-convertible debentures at a coupon of 7.64 percent, its lowest pricing across a string of similar issuances over the past two months. For a lender whose entire business model runs on borrowing cheap and lending dear, a falling cost of funds is arguably a more important number than the headline size of the raise.
A leading housing finance company informed stock exchanges that its Debenture Allotment Committee had allotted 2,50,000 secured redeemable non-convertible debentures of face value Rs. 1,00,000 each, aggregating Rs. 2,500.8458 crore including premium, on a private placement basis. The instruments carry a four-year tenure, maturing on 1 July 2030, with interest paid annually at 7.64 percent per annum and the principal repaid along with the final coupon at maturity.
With a market capitalisation of Rs. 73,341.21 crore, the shares of Bajaj Housing Finance Limited were trading at Rs. 87.97 per share, up 0.54 percent from its previous closing price of Rs. 86.50 apiece. The stock is trading at a P/E of around 28.48.
NCD Allotment Details
The debentures are proposed to be listed on the Wholesale Debt Market segment of BSE under ISIN INE377Y07664, and are secured by a first pari passu charge on the company’s book debts and loan receivables, with security cover of at least 1.00 time the outstanding value of debentures issued under the relevant general information document. Interest will be paid annually across four dates through 1 July 2030, when the fourth and final coupon falls due alongside full principal repayment.
This is the company’s fifth such private placement disclosed since mid-May, following raises of Rs. 955 crore at 7.90 percent, Rs. 500 crore at 7.83 percent, and roughly Rs. 2,000 crore at 8.25 percent across late May and June. The 7.64 percent coupon on this latest tranche is the lowest of the lot, a detail retail shareholders should not skim past.
Why the Falling Coupon Matters More Than the Deal Size
For a housing finance company, the spread between what it pays to borrow and what it earns on loans is the entire business. Bajaj Housing Finance funds its loan book almost entirely through market borrowings rather than deposits, and its total borrowings grew to Rs. 1,03,704 crore in FY26 from Rs. 82,072 crore in FY25, a jump of roughly 26 percent, tracking the 23 percent growth in its loan assets under management. Raising this latest tranche at 7.64 percent, noticeably below the 7.83-8.25 percent range seen on its own issuances just weeks earlier, suggests either a softer interest-rate environment, stronger investor appetite for the company’s paper given its AAA-rated parentage in Bajaj Finance, or both.
A lower marginal cost of funds, if sustained, should support the company’s financing margin, which has held in the 29-31 percent range over the past several quarters. Retail investors should also not be alarmed by the large negative operating cash flow figures that show up in the company’s cash flow statement year after year. For a growing lender, cash used to disburse new loans is routinely classified as an operating outflow, so a negative CFO number reflects book growth rather than distress, and is best read alongside asset quality metrics instead.
On that front, the numbers remain reassuring. Gross non-performing assets stood at just 0.27 percent and net NPAs at 0.11 percent as of the March 2026 quarter, among the cleanest asset quality readings in the housing finance space. Capital efficiency is less flattering: return on equity came in at 12.1 percent and return on capital employed at just 8.84 percent for FY26, modest for a stock trading near 3.1 times book value and around 28 times earnings.
The company has also paid no dividend since its 2024 listing, ploughing profits back into balance sheet growth, a reasonable approach for a young lender but one that leaves shareholders entirely dependent on price appreciation for returns. With the stock down roughly 28 percent over the past year, that appreciation has yet to show up, leaving the falling cost of debt as one of the few concrete positives in an otherwise mixed setup.
Business Overview
Bajaj Housing Finance Limited, a wholly owned subsidiary of Bajaj Finance, is the second-largest housing finance company in India by scale, offering home loans, loans against property, lease rental discounting and developer financing.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
