Ladies and gentlemen, good day. And welcome to Bajaj Finserv Limited Q4 FY 2026 analyst conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raghvesh from JM Financial. Thank you, and over to you, Mr. Raghvesh.
Thank you, Anju. Good evening, everyone, and welcome to the Q4 FY 2026 earnings conference call of Bajaj Finserv Limited. First, I would like to thank the management of Bajaj Finserv for giving us the opportunity to host this call. As always, we'll have opening comments from the management team, post which we will open the floor for Q&A. From the management side today we have Mr. S. Sreenivasan, President, Insurance and Special Projects, Bajaj Finserv Limited; Mr. Ramandeep Singh Sahni, CFO, Bajaj Finserv Limited; Mr. Tapan Singhel, MD and CEO, Bajaj General Insurance Limited; Mr. Tarun Chugh, MD and CEO, Bajaj Life Insurance Limited; Mr. Avais Karmali, CFO, Bajaj General Insurance Limited; Mr. Vipin Bansal, CFO, Bajaj Life Insurance Limited; Mr. Ashish Panchal, MD and CEO, Bajaj Finserv Direct Limited; and Mr. Ganesh Mohan, MD, Bajaj Finserv AMC.
With this, I would hand over the floor to Ramandeep, sir, for his opening comments. Thanks, and over to you, sir.
Thank you for the introduction. Good evening, everybody. We welcome you to this conference call to discuss the results of Bajaj Finserv Limited, BFS, for quarter four FY 2026. As before, in this call we will largely be concentrating on the consolidated results of BFS, the results of our insurance operations through Bajaj General and Bajaj Life, our emerging companies which include Bajaj Finserv Health, Bajaj Finserv Direct, Bajaj Finserv Asset Management company, and lastly, where material, the standalone results of Bajaj Finserv itself. Our two other subsidiaries, Bajaj Finance and Bajaj Housing Finance, have already had their conference calls and hence we would pursue only very high-level questions on these companies.
To start with a few hygiene points, as a word of caution, we affirm that any statements that may look forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance result. Let me also give you an update on the basis of accounting, which we use at a Finserv level. As required by the regulations, Bajaj Finserv prepares its financials in compliance with Indian accounting standards referred as Ind AS. The insurance companies are, however, currently not covered under Ind AS. They have prepared their Ind AS financials only for the purpose of consolidation with Finserv. Accordingly, for Bajaj General and Bajaj Life, standalone numbers reported are based on non-Ind AS accounting standards, which is referred as Indian GAAP, as applicable to the insurance companies currently.
However, on this subject, as per the recent regulations from IRDAI, insurers are now required to transition to Ind AS from FY 2027. However, the said regulation also allows insurers to seek a forbearance for a year, keeping in mind the level of readiness of each one of those. Accordingly, both our insurance companies plan to seek forbearance for a year and would transition to Ind AS from April 1st, 2027. Now moving to an update on our joint venture with Allianz. I'm happy to confirm that in March our insurance subsidiaries, that is Bajaj General and Bajaj Life, have completed the buyback of the balance 3% Allianz stake, making our insurance businesses now 100% Bajaj. Made in India, made for India, and made by India.
The buyback not only concludes the buyout of Allianz stake, but it also is expected to strengthen the ROE and the ROEV of both the insurance subsidiaries going forward. Post the buyback, the 100% holding of the insurance subsidiaries by the Bajaj Group is split as follows: 77.33% is held by Bajaj Finserv, 18.1% by Bajaj Holdings, and about 4.6% by Jamnalal Sons Private Limited. I'll now jump into the high-level results for the quarter on a consolidated basis, which have been put out in a press release dated April 30th. The consolidated total income grew 6% to about INR 38,508 crores versus INR 36,434 crores for the same quarter last year.
However, you may please note that the income for the quarter looks a little depleted because of the high impact coming from the MTM on the fair value through P&L portfolio held by our insurance companies. As the total income includes investment income and some of the investments by the insurance companies are held at FVTPL basis due to the geopolitical tensions, there is a temporary MTM impact impacted the revenue. If we gross up the MTM impact on the revenue, the revenue growth will actually be 14% as compared to the 6% reported by us. Similarly, the consolidated profit after tax also grew at about 5% to INR 2,539 crores as against INR 2,417 crores for the same period last year.
Again, excluding the temporary MTM losses of the insurance companies, the consolidated profit after tax actually grew at a large 24% as compared to the 5% being reported by us. Just to summarize, both the revenue and the bottom line for the quarter being reported are largely impacted by the MTM impact, which we believe is temporary in nature due to the geopolitical risk. If we gross it up, excluding these MTM implications, the revenue growth and the PAT growth are very healthy at 14% and 24% respectively. I'll just deep dive into each of the respective companies to give a texture on the companies itself. Let's start with Bajaj General.
On GWP growth basis for the quarter, the growth was muted at INR 4,322 crores as against INR 4,326 crores for the same quarter last year. This is largely on account of tactical decision made by the company on reducing its exposure to crop and motor amid the elevated pricing pressures which we've seen in the market in the last quarter. However, if we exclude the bulky crop and government health businesses, the GWPs in fact increased by 8.3% as against the market growth. When we refer to market, it's the multi-line growth of 11%. Here we know that the multi-line growth was backed by some of the players seeing AUM stress, and hence they may not be comparable at this point.
Underwriting losses stood at INR 96 crores for the quarter versus about INR 3 crores for the similar quarter last year, impacted largely by elevated claims arising from our government health business. This essentially arises from the fact that the loss ratios on these schemes are higher in the initial months and then they taper down, so it is kind of a timing variance. Also the lower crop business which we've done in the last quarter, given the stress we saw from a pricing perspective. The combined ratio for the quarter was elevated at about 113.6% for the quarter as against 104.8% for the same quarter last year.
This essentially came from the fact that we did a treaty within the last quarter on government health business, but it was done on retro basis from the third quarter, which meant that the NWP for the period was depressed because of backdating of this treaty and hence the elevated combined ratio. If you look at the combined ratios excluding the bulky businesses, which is government health and crop, the combined ratios actually improved for the quarter versus the same quarter last year.
On a full year basis, however, if you see the combined ratio, which nullifies the impact of these timing variances, the combined ratio on old basis, which is the non -1 / Nth basis, is reported at a very healthy 101.9%, which we believe will continue to be amongst the best in the market. The ROE excluding surplus capital, which is at about 200% solvency, stands close to 19%, for the period. PAT growth also remained flat, for the quarter for the same reasons which I mentioned earlier, the fact that there was a timing variance on government health schemes, claims being booked, and we did lower crop business, which last year same quarter was very profitable.
On AUM, we ended the year at about INR 35,529 crores, as against INR 33,122 crores for the same period last year, a growth of 7.3%. It's important to note that both AUM and solvency for the period have been impacted due to the one-time impact of the buyback of the 3% Allianz stake, which we've done, which for Bajaj General Insurance was close to INR 1,590 crores. To summarize these operating results, including the combined ratio and ROE underscore Bajaj General's disciplined focus on delivering balanced and profitable growth, supported by strong risk selection, robust distribution, prudent underwriting, and continued emphasis on exceptional customer service in the most difficult and highly competitive market. We will now move to Bajaj Life.
Bajaj Life's financial outcomes have been in line with the plan for transition to sustainable and profitable growth, as was highlighted in the mid of last year. The impact of change in strategy continues to be reflected in the fourth quarter results as well. The retail weighted received premium for the quarter grew at about 9.7% from INR 2,328 crores to about INR 2,550 crores, largely in line with the industry growth. What's important to note is that retail protection contribution in the overall retail business has grown to 8.4%, with overall growth of 67% for the period. The group protection business has re-registered a very healthy growth of 42% for the quarter.
Moving to the bottom line parameters, our VNB for the quarter grew at a very healthy 29%, up from INR 549 crores to about INR 709 crores for the quarter. The NBM is for the quarter up to 24.5% as against 22.1% reported for the same period last year, an expansion of about absolute 2.4%. These outcomes are despite the gross GST impact of about 5% on NBM for the quarter and about 2.9% on a YTD basis. The GST impact on VNB has been largely mitigated on exit basis in March 2026. We can now clearly see that the benefits of our revamped strategy, Bajaj Life 2.0, are clearly visible in the financial outcomes as has been depicted earlier.
On the back of continued strong renewal premium growth of about 18%, Bajaj Life's GWP grew at 21% for the quarter. However, it's important to note that persistency dips were observed against certain cohorts in line with the market. However, the management is working on it to bring it at the similar levels we've seen in the past. On an overall basis, the retail-weighted received premium product mix for the quarter was very well-balanced at par with 25%, non-par and savings, non-par savings and annuity at 24%, term at a very healthy 8%, and ULIPs at 42%. The profit after tax also registered a very healthy growth of 78%, up from INR 41 crores for the last quarter last year to about INR 73 crores for the quarter being reported now.
Bajaj Life ended the quarter with a AUM of INR 133,500 crores, up about 8%. This was along with the solvency impacted by the buyback of 3% of Allianz's stake, which for the Life company was close to INR 1,200 crores. The quarter for Bajaj Life is in line with the expectations and on the right trajectory of sustainable and profitable growth. Both the insurance companies continue to be financially strong, with solvency for Bajaj Life at 266% and Bajaj General at 300%, and hence are very well poised to weather any external adversity. We will now move to the lending businesses. I'll start with Bajaj Finance. A very strong quarter across all key metrics, including volumes, AUM, new customer addition, credit cost, and profitability.
The number of new loans booked for the quarter was at about INR 1.3 crores as against INR 1.07 crores for the same quarter last year, a growth of about 21%. The company's diversified business model has enabled it to cross the record milestone of AUM of INR 5 lakh crores and a strong AUM growth of about 22% at INR 5,09,975 crores. The net total income grew by about 21% to INR 14,209 crores, up from about INR 11,750 crores for the same period last year. PAT was close to INR 5,500 crores for the quarter.
If you look at the OpEx to net total income ratio after adjusting for the loan losses and provision reclassification which the company has done, the ratios are flattish at about 33.2%. There is a slight increase which is visible sequentially due to the cascading impact of the new labor code which we had seen in quarter three and accelerated gold loan branch expansion. We have also been investing in AI implementation, that also impacts the ratios to some level. However, both growth. However, we are seeing acceleration in both growth and improvement in operating efficiencies due to the AI investments we've been making. Loan losses and provisions for the quarter were at about INR 2,008 crores, as against INR 2,167 crores for the same quarter last year.
Before the additional ECL provision, it increased by about 8% to INR 2,125 crores, up from INR 1,970 crores for the same period last year. In quarter four, we saw a net decrease in Stage two and Stage three assets, at about INR 430 crores, reflecting a continued improvement in portfolio quality and the outlook on credit costs going forward. The GNPA and NNPA stood at a healthy 1.01% and 0.4% respectively, as against 0.96% and 0.44% for the same period last year. The capital adequacy remains strong at 21.55%, and the Tier 1 capital was 20.67%. I'll now move to the mortgage subsidiary of BFL, Bajaj Housing Finance Limited.
Again, a very good quarter on disbursements, AUM, operating efficiency, asset quality and profitability. A stable quarter with AUM growth of 23%, driven by good momentum in disbursements. This was backed by some portfolio attrition. Growth was very well distributed across all the business segments. Home loans for the company grew at about 18%, loan against property grew 24%, lease rental discounting grew 44%, and developer finance grew 13%. The net income, the net interest income grew 15% to about INR 945 crore, as against INR 823 crore for the same period last year. The operating efficiencies continued with OpEx to net total income at a healthy 19.2%, as against 21.8% for the same period last year.
Healthy asset quality continued to be maintained with GNPA and NNPA at a very small 0.27% and 0.11% respectively. PAT grew by about 14% to INR 670 crores for the quarter. However, this excluded the one-time impact of tax credit, which the company had taken last year of INR 34 crores. The PAT growth would have indeed been 20%. The capital adequacy ratio stood at 22.46% as of March 31st, with Tier 2 capital at 22.01%. In summary, another very strong quarter for both our lending companies, Bajaj Finance and Bajaj Housing Finance Limited. Now let me give you update on our emerging companies. I'll start with Bajaj Finserv Health.
For the quarter, Bajaj Finserv Health logged in about 6.5 million healthcare transactions as against about 5.3 million transactions done for the same quarter last year. Bajaj Finserv Health continued its expansion of the provider network, which includes about 1.3 lakh+ doctors, about 15,000+ hospitals and about 6,500+ lab touchpoints. Utilizing this network strength and its tech platform, Bajaj Health is able to offer an integrated OPD, IPD and wellness experience to both retail as well as corporate customers. During the quarter, the revenue for the company grew at a very healthy 41%. In all, overall, a good quarter for Bajaj Finserv Health.
Moving to Bajaj Markets, during the quarter, the disbursements for the quarter were at about INR 2,047 crores as against INR 1,800 crores for the trailing quarter, which is quarter three of FY 2026. The company ended with a total unique partner count, which are the partners available on the platform of about 103 in number. The operating revenue for the company, however, for the period, has indeed degrown to about INR 95 crores, down from about INR 129 crores for the same period last year, which is attributable to decrease in loans and transacting customers during the quarter. As has been indicated earlier in the past quarter, this essentially was a planned degrowth because we had planned a migration of our new system, which is being used by the frontline sales, and the migration is now complete.
We believe that the degrowth year-on should be behind us. Further, we have also changed the revenue structures within the company, where some of the revenues and move on a trail basis, which now provides stability and predictability and a nonlinear future revenue. The business model also has been aligned with the RBI digital lending directions for LSPs, which came into effect from November 1st, 2025. Now moving to Bajaj Finserv Asset Management Company. The AMC continued its good run, recording a AUM of about INR 26,820 crore at the quarter end, and it retained the 26th spot amongst all the mutual fund companies in India in terms of AUM. The closing AUM was heavily impacted as we knew due to the geopolitical tensions.
However, if you look at the average AUM for the quarter, it was a healthy INR 30,627 crores as against INR 20,133 crores average for the same quarter last year, a growth of 52%. The equity mix in the AUM stands at about 59%, and the non-group share of AUM constitutes about 94% of the total AUM. This is just to sum up the performance on all our companies. Before we open for questions, considering the paucity of time, I would request the audience to kindly keep their questions brief so that we can cover more queries during the call. With this, I invite questions from the audience.
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question, you may press star one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are required to use for asking questions. The first question comes from the line of Shreya Shivani with Nomura. Please go ahead.
Yeah, thank you for the opportunity. I have two questions. First is on the life insurance entity. Non-par savings mix has reduced. Just trying to understand if you can give us a flavor of how were the markets for the non-par product in the year that has gone by. Was there any pricing pressure that you'd like to highlight? What is your strategy for FY 2027? My second question is on the general insurance piece. Sorry, the motor TP piece over there. The reserving triangles looks like the release in TP in FY 2026 has been higher. I'm coming to about INR 800 crores versus usually the INR 600 crores-INR 700 crores you've done in the last couple of years. Any color you can give around what has happened here.
Sorry, I'll squeeze in one more question. This is on Bajaj Direct. Good to hear that the migration, et cetera, is completed. I just want to understand, as we enter into this year and there are a lot of concerns around some of the business loans and what can happen, et cetera, are there any measures we are taking to tightening anything from our end? Those are my three questions. Thank you.
Vipin, you wanna take the first one on non-par savings? Vipin or Tarun, whoever.
Let me just step in.
Shreya Shivani, thanks for your question. See, non-par, the way we see it is a bucket of non-par plus annuities, because annuities are the same cast structured differently. Our annuity actually doubled from 5% - 10% in the financial year and, yeah, overall non-par did come down from 21 to 16. Overall, if you look at it, I mean, broadly we are at 26%-26% both, in both these casts if you look at it. The market has actually looked at more higher age customers coming in and which is where, I mean the way we look at the market is when maybe higher age customers would rather have more annuities than have medical-based products.
We are seeing a consistent shift in the market towards annuity and I think this is a very healthy sign because usually the customers above the age of 50 have more money in their pockets and hence are able to take more such more health and life products. Our ticket size in annuities has actually doubled in the last year, so that is the healthy one. You should expect that when we talk we will fundamentally look at these two buckets together because they're intertwined. Actually if I might just say on the non-par market as to what's been happening, as you're aware, up below INR 5 lakh and below there is a tax benefit trade available.
Whenever our tax, post-tax returns between fixed deposits and non-par savings actually comes to about approximately 2%, that this gap comes to around 2%, the industry gets a lot more tailwinds in non-par saving plans. If there is liquidity in the banking sector and post-tax FD returns look at this kind of a gap with below 5 lakh ticket size, we will expect the non-par savings to continue. It's really an impact on the market. There's nothing to do with the pricing, et cetera. As of now from our side, there's fundamentally a shift to higher age brackets. I hope that answers the question.
Yeah. Yes, that was useful. Thank you.
Tapan, you want to take the question on TP releases?
Yeah. If you look at TP release is a factor of how the book develops and TP is a long tail book. As the claims development happens and compared to reserving, how is it developing and what has to be seen. And if the numbers you mentioned, I don't see that there's a huge shift in terms of the release happening, which means that the company has adequately reserved over time. As the book keeps on developing and claims are getting paid and the releases keep happening. It's a natural phenomena. I don't see any change in the philosophy of how it's progressing.
Thank you. A reminder to all the participants that in my best star and one to ask a question. Next question comes from the line of Prayesh Jain with Motilal Oswal. Please go ahead.
Hi. Just wanted to understand on the general insurance front, you know, how do you see the product mix evolving and, you know, the overall profitability of the entity going ahead into FY 2027? How do you see this kind of moving?
If you look at it, and it's an interesting question, let's look at last year. The industry combined ratio actually moved up by about 6%-7%.
Right.
If you look at Bajaj General combined ratio, it's 200% last year, no. Even the industry deteriorated by about 6%-7% combined ratio. Bajaj General still, you know, was where, you know, it normally remains close to 100% is what the endeavor always is to be. Their industry is 121% or so. If you see the gap, it has been huge, and that's why even in the fourth quarter, I think Raman was mentioning, as we saw the combined ratio deteriorate, I think we in places where we felt the pricing is not appropriate and that we have been doing all these years where we go slow, where we see that the price is appropriate from a customer perspective to serve as well as the one that we write.
Next year it again depends on how the industry moves. If you look at, in fact one of the quarters last year, the industry combined ratio was 128% also, you know.
Right.
Fundamentally, as a company, our philosophy remains the same. We are a company which is there for 100 years. It is not a company which we are looking at a short term, you know, in terms of making it up. It will always do prudent underwriting. It will always be our customer offsets. It will always find opportunity in the market where to grow and keep on growing. That's what we have been doing and for the next year also the philosophy remains the same.
Even product mix, you know, the government-led businesses on health or it does a crop business, Is there an approach towards any regulation?
As I said, no, I think I've mentioned this, lot of previous calls also. The approach is simple. Wherever the pricing is appropriate in which we serve the customers well is what we write. If you tell me that I make an approach right now and say this is what I'll write and the pricing appropriate for that, why we write that? Bajaj General is one of the large insurance company in India, which means that we write all product lines and we have a decent market in each one of them. The variation just happens dependent on how the market behaves in which product line, where we get more aggressive or pricing goes below what we feel comfortable. There we reduce. Where the pricing is appropriate, we increase. No.
We can never, you know, kind of tell you that next year this is exactly what we shall do, we'll move prop up or move this. Just in all lines of businesses, you will see that we are among the top companies in where we position ourselves. That is how we shall continue. Right. Depending on the pricing of the particular product line in the years to come, we shall, you know, move on that basis.
Got that. Thanks. On life insurance.
Mm-hmm.
You know, just trying to understand VNB margin trajectory from here on. You know, what kind of VNB margin should we think and what kind of product mix that you would be targeting for FY 2027? You know, given the market uncertainty right now continuing in April, do you think that the product mix kind of, which has moved slightly away from the ULIP, not a big one, but for the full year, but do you think that trajectory will continue and the margins can kind of continue to improve on a full year basis?
Okay. Let me just give you a little bit of a strategy part and Vipin can jump in to give you specifics. Where thing this is that directionally all our product segments are now profitable. The fact that there is ULIP. ULIP is now profitable, this is a discussion we had had about 18 months back. Now our ULIP the growth is actually not a bad sign, it's a good sign. Fundamentally, as the product mix is moving, we've had this entire culture shift in all our businesses, including agency, which have very, I'd say very well picked up the term plans. I think that has been the significant needle mover in terms of product mix.
We expect the trajectory of term to only increase from here on, that should impact our VNB margins only positively. As you know, term, while maybe a little lower ticket size, if you are able to sell more of core term then it is only what helpful to the VNB margins. Directionally, that's what is moving. Vipin, if you'd like to add anything, do so.
No, I think, Tarun, that sums up. Prayesh, to be more specific, the margin expansion that we are talking about, and this is, you know, after accounting for the GAC impact that we had called out. I think, as we had said earlier, it's a combination of our channel product mix, the way we are able to manage the kind of products we are offering and we do apply some agility there. Obviously, the cost effort that we have taken that is contributing about 150 basis points to the margin. While all of that is there, in terms of product mix, we have always maintained that we would want to have, you know, a par at about 25% plus minus, annuity plus, non-par savings again in the 25%-30% range.
Term we would aspire to be 10% +, ULIP will be about 40%. I think that's the mix, that's the stable mix we would want to be operating at. I hope that answers your question.
Yeah, definitely. Just last one question on AMC. At what scale of AUM do you think that this business will break even? What should be the target for us in our model from a break-even perspective? What are the new segments that you are kind of investing in, PMS, AIF, SIF, all these products something which you are developing as well?
Yeah. On the AMC side, what I would say is the break even for us would be close to about, INR 1 lakh crores, with the continued mix on, equity versus debt versus, passive. At this point, we are actively considering both the PMS as well as the SIF. Within the next 1.5 years, we will be launching both these business lines.
Yeah, I got that. Thanks.
Mr. Jain, are you done with the questions?
Yeah. Thanks. Thanks.
Raghvesh, I think we missed one question from Shreya. Maybe Ashish, if you can answer that. The question was on the concerns on quality of loans. If you can just take that, please.
Sure. As a marketplace, we get a ringside view of the prevailing risk and resultant countermeasures by various manufacturers, and therefore they adjust the share of business that they take various manufacturers from our marketplace from time to time. As a distributor, however, from the total throughput point of view, while our mix across manufacturers changes depending upon their risk measures, this doesn't affect us being a distributor. Having said that, we have seen that two years ago the risk was much higher in the market, as you can see from bureau report. Therefore the resultant manufacturer actions, especially in business loans were high. Even last year, they were significant. For a period of time, we have seen portfolios behaving better.
Anyways, we are insulated from any balance sheet and P&L impact of such a risk behaving adversely in the manufacturer's portfolio. Having said that, we choose our manufacturer partners very, very carefully. Our volumes are not affected and hence revenue is not affected. I hope that answers the question, Shreya.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Sanketh Godha with Avendus Spark. Please go ahead.
Yeah. Thank you for the opportunity. My first question is on life insurance. If I exclude GST impact, the margin for the year was at 22% and you said that most of the mitigations have been done with respect to GST negative impact by end of the year. Is it fair to say that in next year, if the product mix remains broadly the same, we'll end up reporting a 22 kind of a margin for the next year? That's my first question.
Vipin?.
Sanketh, let me answer that. When we say we have mitigated, what that really means is for us, as we exited March, and I'm saying for the month of March, we have mitigated almost 90%, 92% of the GST impact. A residual impact of 30, 40 basis does exist, I think now that's part of our cost structure. The question on what do we mean by mitigation? What we mean by mitigation is we have changed some of our product that we sell in the market. There has been a change in the kind of products or the product mix, if I could say. Cost optimization has continues for us, we have renegotiated some of our commercials with our partners.
If that continues, then that 4.5%, that annualized impact of GST that we talked about, that has been mitigated. I'm not sure of 22% that you were referring to. If you can just help me understand that.
No, in the VNB walk, the margin what we mentioned before GST impact is 22%. If I'm assuming given we will work with the same no GST impact broadly, I mean, then with the same product mix, are we going to report closer to 22% margin in the next year?
Okay. Let me clarify. That's not the way to read it. When we looked at the walk, we actually showed the gross GST impact. All the mitigants of that are part of our walk in terms of the new business mix and the profile that we are talking about. The dent of INR 242 crores that you see is the gross dent. The mitigation of it, and let's assume that it's 100% mitigated as of March end, that benefit is sitting in the 636 bar, if that's what you're referring to.
Yeah. Yes, we think because the benefit will be there for the entire year next year.
Yeah
... then we will be probably assuming same business gets repeated in FY 2027, then the margin what we are looking at is 22%. That's the point I'm asking for FY 2027.
Yeah, Sanketh, let me step in on that. You will not hear any affirmation or otherwise from us on margins if you're going to indicate like this, please.
Okay. Sorry. I misunderstood.
Directionally, directionally we can tell you we are in a positive trajectory and all those changes are resulting in the positive margin, we're not gonna indicate any margin. Yeah, it's positive.
Understood. Understood. Thanks. Thanks. Thanks for the answer. The second question probably was that is on the growth because second half we probably operated on BALIC 2.0, but basically comparing with the previous base. Our growth came back to around mid-teen. Is it fair to say that this is the kind of growth that we will end up? If that is the case, that heavy lifting will be done by agency channel because that's the channel which took the maximum hit last year. Is it fair to say that the second half growth is more like growth going ahead and will be done by agency channel?
You should see a better growth than what you saw in our second half. That much I can say. All our businesses are in now a growth trajectory, various reasons. On the bulk partners, the bank insurance side, we've added three significant partners in the last 18 months, Federal, AU and Yes Bank. Now they should start kicking in. We already have a very significant base of small and medium partners which have been growing quite well. That trajectory is positive and I can see that the bank insurance team is adding a lot more value to its partners by selling risk products as well now. That is working for both party. On the agency side of the business, yes, we did reconfigure.
We actually stretched our reconfiguration, if you remember in December when I told you. Because we felt that there was more and more buy-in for our term plan and that the ticket size of term is obviously lower. We recorded a 8% growth Q- on- Q for the last two quarters for agency. This I would say is a little understated. You should expect it to be better. Also because the fact that the product mix is now largely set and the input parameters that we are seeing in agency, like the number of partners we are adding, number of distributors that is, plus the number of policies we are adding in agency, the trajectory is only positive. We come to our proprietary sales and direct channel.
I think that is been a healthy contributor and we continue to innovate with data and technology there and see how we can work with customers and the data we already have to provide more and more target products. That target trajectory was also undergoing a change given the fact that we did not grow as expected in proprietary sales last year. But all that growth will be back. You should expect a high growth.
understood. Lastly, one data keeping question. On the EV side, the assumption change of INR 51 crores is predominantly related to which operating parameter, whether it's mortality or persistency?
Sanketh, on the portfolio basis, I think assumptions are holding good. You would see there has been a dip in our persistency, and that's what largely is reflecting in assumption change.
Understood, understood. Lastly, 1 question on general insurance. Broadly, I just want to understand this reinsurance strategy. I know that we did lot of government businesses and our reinsurance retentions are closer. Our retentions are closer to 40-43%. Even if I exclude that, we typically are little higher on ceding business now. Whether we'll revisit this strategy or we think that this will continue even going ahead, even in other line of businesses, given I understand that government businesses are lumpy and we need to rely on reinsurance investments.
Tapan, you wanna take that?
I didn't get your question. See, reinsurance is not a strategy. It is how you build your book. Wherever you see no volatility or large risks, those you reinsure. It depends on the book composition that you have. If you look at retail, most of it, you know, you would keep on your books. If you look at be it government health, be it crop or be it commercial lines of business, they would be reinsured. Accordingly you decide how to do. The balance sheet actually protected in terms of any volatility, in terms of large risk. That is how all the good companies write their reinsurance. Also they look at the ratings of reinsurance.
They have to be, you know, well-rated reinsurers. In times of any big losses, the reinsurer is able to support that. Which in the past also we have seen when be it, Jammu and Srinagar floods or be it, you know, Bombay floods, we were always regularly protected. In fact, our reinsurance cap is also double that of what the industry looks for in terms of the year two return perspective which would be there. Fundamentally, it's a very well arranged reinsurance to take care of any eventuality. And also depending on the lines of business mix that you write and how do you put it together. What is your apprehension on that? I cannot.
No, no, it's not an apprehension, sir. My only question was that even in the retail lines, especially motor, we compared to our historical past, we cede little more these days. Whether that approach would be revisited or we think that that's still a good thing to do in the future.
It depends on how the market moves and what lines of businesses you write. That's why I said the approach does not change. The approach remains the same. Depending on how the market moves, what line of business you're writing is how the reinsurance operates, no? It's a combination of that. You don't change the strategy in terms of, you know, how you reinsure your book. You will always reinsure book in the strategy I mentioned to you. In terms of wherever there's high volatility, you'll have high, you know, reinsurance coming in. When you have more stability, then the reinsurance, you know, comes down. When you have large risks, then the reinsurance, you know, is again high. Where the PMLs, you know, move high, then you have, you know, reinsurance high.
When it comes down, the reinsurance, you know, evens out. When you have cat losses happening, the reinsurance for that, you know, moves up. When they come down and your chances of cat losses are lower, you know, accordingly you adjust your books on that basis. I think the basics of insurance or basics of writing business is the same. It's a combination of various things. How does the market move? What is the volatility you're writing? What lines of business you're writing? Decides how much reinsurance do you buy in what lines of business, how do you put that together.
Understood, sir. That's useful. Thanks for the answer.
Yes. Thank you.
Sanketh, your answer actually lies in the commercial outcomes, if you look at it. You know, at what price do we really get the reinsurance? What am I reinsuring? Like Tapan said, see, essentially our exposure looks higher on the ceding side because we write a lot of bulky business, which is crop and government health, as you rightly highlighted. On the other side, we also write a lot of large risk, and that essentially because of our bancassurance, we get a lot of these large accounts. A combination of all of these actually translates into what a reinsurance strategy is. Now at the end, whether I'm making money out of it or no is what finally really matters, right? Our combined ratio vis-à-vis the industry will answer that question. That's where we stand today.
Thank you. A reminder to all the participants that you must press star and one to ask a question. Next question comes from the line of Divij Punjabi with Banyan Tree Advisors. Please go ahead.
Yeah, hi. Thanks for the opportunity. I had three questions. One was on the general insurance side. Just wanted to understand how are we seeing the comparative intensity playing out in motor and group health lines of business. Second is, on the life insurance side. What is or how are we looking at the expected impact of the change in the commission structure that is expected to come in the next few months? Lastly, what is your strategy on the alternative business? There was some news around Bajaj Alternatives wherein they're looking to raise about $1 billion. If you can talk about that, it would be helpful. Thanks.
Hello.
Yeah, Tapan. Tapan, the question on motor and GMC competitive intensity.
Yeah, exactly, yeah. If you look at the market that I mentioned just previously, the combined ratio industry has moved up by about 7 percentage points and from one quarter it moved to 128 and moved to 121. That always happens when the competitive intensity is high in the market. I think that is where, you know, the combined ratio starts moving up. To the point that you have mentioned, yes, there is competitive intensity in some businesses like motor, you know, GMC and even in fire also, you know, there would be, you know, competitive intensity. I think toward the last quarter it was more because of the EOM guidelines.
I think a lot of companies which were above 30, they wanted to ramp up their numbers, so that they can come within 30 of the EOM guidelines. If you look at it and pick up companies which are in EOM over 30 and look at last quarter their aggression, you will give an attempt how, you know, it moves. Companies which have good EOM, you would watch, you know, that they would, you know, position in terms of where they are. A lot of things depends on how the company decides to play that on. In such environment, the competitive intensity does move up.
That is why if you'll see from a company's perspective, that we would slow down, as I mentioned earlier, in places where we see competitive intensity is moving up. When we see the pricing is right, then we move up because we have no pressure of EOM. I think we are one of those companies which have a comfortable expense of management, and we are well within it in terms of where we are put together. It's just a right business to get our EOM right. We write business where it makes sense to write.
Okay. On the life insurance side, the question was on commission. We haven't yet received any message from the IRDAI. There is no draft circular yet. A lot of this we'll be discussing hypothetically.
What I do understand is that the mood seems to be more on back-ending commission from front-ending. I don't know about the reduction of commission if there's any plan. Nobody's really got any riff on this till we get something from them. In either case, if this is executed to the T, it should only benefit the sector. It should bring down the EOM pressures. It should help entirely the persistency ratios. It should help our customers getting a better proposition, and that is the whole intent of IRDAI to be able to pass this benefit to the customer. We just wait for that until that comes in. It's really very difficult to say anything beyond this at this point.
Okay. On the alts one, I'll just try to summarize. See, this was one of the white spaces we had identified. See, being a financial services powerhouse, we realized that, you know, alts business is something which is growing pretty healthily globally also and not only in India. We identified that as a white space last year and we had called it out in the investor day that this is an area we will venture into. In the last six to eight months we've actually built up the team and as we speak, we are planning to file, sorry start the PMS part to start with. We've already got approval from SEBI. We should launch the listed equity and PMS very soon.
On the other side we are trying to launch some Cat 2 and Cat 3 AIFs for which we have filed for approval with the regulator for a private equity AIF and a real estate AIF. Hopefully, you know, in the next quarter or so we should get approval for that as well. That's currently what we've done. The idea is also to get into some bit of listed equity for which we will soon be filing for approvals. Yeah, this is where we stand today. I think in the next two quarters is where we will actually start rolling out our new products. That's the strategy as of now.
Also the idea is that we get into a GIFT City structure to attract some NRI and foreign investors to take arbitrage of the tax benefit structure as well. That's where we are currently. Beyond this, I think, in the next few quarters we will start talking about it as and when the business is launched.
Thanks. That was very helpful.
Thank you. Next question comes from the line of Nidhesh Jain with Investec. Please go a head..
Thanks for the opportunity. My first question is on life insurance. On persistency, what is happening in your view on the at the industry level and for you also that persistency after improving post-COVID for four, five years. This year we are seeing decline across the companies on persistency. How do you see persistency trends going forward?
Yeah. That's a very good question, and that's something that worries all of us and is a focus segment of the sector. Overall, if you look at it, there was a set of products which were introduced by a few market leaders about 12 months-18 months back. These products were early gratification products for the customer, and we did see people then not continuing once they did get benefits already available.
Now that we were all expecting lower persistency in the sector, we have just seen the result of that. It's the swing has been more than the expectation. Largely, it is just one bucket that has impacted the entire sector. While we've grown by, we've de-grown by about 1.8%, we expect that the sector will actually de-grow even further. We had this product with us earlier, but we did not launch it till it was becoming, you know, inevitable that we have to do it in the market because distribution was just lapping onto this product. I think hopefully the entire sector has learnt its lessons, and we don't do something like this again.
As far as we are concerned, we've stopped selling this product, and since October have anyways been bringing it down. At the same time, has it impacted profitability? No, because the persistency was already baked in the entire process. These kind of things should largely be avoided in the sector, is the way I would answer that question.
Sure, sure. Secondly, if you look at the data, in terms of household preferences, protection and equity, I think they are growing at a very healthy pace. On saving side, what we are seeing that the preference towards mutual funds and equities has been increasing. It's not just a one-year trend. It has been a quite secular trend for last four, five years. In that context then, life insurance deposits are losing share in the household savings. In that context, how as a industry or as a large life insurance company, how do we plan for next, let's say, five years? I think every year the share of household savings towards insurance is gradually at a very, very gradual pace, but it is declining for sure.
How we stay relevant from a savings to capture the savings pie of a household?
Okay. No, that's a very good question. I'm sure it kept most people awake. The way we've looked at it, although it's very different, we have ridden the SIP market in Bajaj Life as well. We today sell a lot of our ULIP plans in what we call as SISO. It's a trademark that we've taken. It's a Systematic In, Systematic Out plan, where you put in money every month into ULIPs and over a period of time, take the benefit of staying in the market for longer and take the benefit of then getting equivalent to monthly benefits over a period of your lifetime. For under INR 250,000 ticket size, this product also has all tax breaks available.
It's actually a very sweet spot, and it's something that is growing for us. We've looked at the entire market, and nobody's been able to run this distribution within the annual mode products. We expect that to bring in a lot more of the benefits that SIPs and market do bring in. As for the rest of the product architecture, a lot of that is on structured benefits available to customers, and we are largely linked to life goals, whether they are on child saving, whether they are on long-term savings, and of course, mortality and the risk of longevity. These risks are real.
While in a lot of vast spaces, the mutual fund market is also pretty much playing, which is why we see the Bajaj Group does have another mutual fund and a life insurance company. We play in the same space sometimes, of course, but it's a product with a different cost and a different benefit. An annuity product, for example, is something that people don't cannot produce but life insurance companies with their long-term guarantees, and that, as you see, as a trend, has been going up. That's a very healthy trend, I would say, because nobody else can offer that. There are some unique spaces we have and largely in structured products.
We expect those to just keep growing as there is more wealth in the hand of Indians, which as you see is a positive trend in that case. The rest, of course, is also linked to the distribution we keep creating. There is still so much more scope. If you notice, the life insurance sector has possibly invested most in terms of number of branches, front-line sales and the number of advisors that we have. I think that should only just keep growing in the future. That will always remain a positive for our sector.
Sure. Thank you. My two question is on the other businesses, which is Finserv Markets. If I look at Finserv Market, that revenue has been quite flattish for a long time. It's a digital business. Ideally, it should grow at a pretty healthy pace. I think. I think that last 15, 16 quarters, the revenue has been flattish. What is the strategy here and what is going on here?
Ashish.
Okay, I'll break this into two parts. The company has two divisions. What we call as Bajaj Markets as customer-facing names is our marketplace in BFSI. There we have 100 + manufacturers as our partners across lending, insurance, AMCs, credit card, offered by banks and so on, so forth. There, the revenues grew healthily up until FY 2026, wherein, as Raman said in his presentation, owing to our migration of platform and owing to the need to be compliant to RBI's new DLG guidelines, we had decreased revenues for 1 year. The revenues are coming back onto track in FY 2027 as per our plan. The nature of the revenues is changing. Now we have a few partnerships which have trail revenue, which provides it stability and nonlinearity, which will play out as the quarters pass by.
You shall see that our stated aim of break even very soon, probably by the end of this year, is a possibility as the quarters pass by within this year. The second reason is that over the last four years, we have invested in building a technology services business. It is a business that leverages the group's technology capabilities, and by that I don't mean only our companies, but across all group companies. We offered these technology solutions to companies within the group. We went outside of the group to rest of the companies in India and offered it to some other companies. We went to Middle East, and now we have established a subsidiary in U.S.
Therefore, this phase of investment in technology services as a parallel business as per the long-range strategy that we have for the company, has also meant that outwardly looking, the revenues look flattish, but both the businesses are poised to deliver, and you shall see it in the coming quarters.
Sure, sure. Lastly, if you can share the number of paying users in Bajaj Finserv Health. I think Bajaj Finserv Health are showing decent growth now, but what is the count of paying users there?
We are just looking at the data. Maybe we can take, just, give it to you offline.
Sure.
Nidhesh will give it to you offline. We don't have it handy.
Sure, sir. Thank you. That's it from my side.
Thanks.
Thank you. The last question comes from the line of Nischint Chawathe with Kotak Mahindra.
Hi. Just, yeah, thanks for the opportunity. Just continuing with health, you know, when do you know, based on the current business trajectory, when do you really, you know, expect to break even?
I think we are about two years from that is what we have envisaged. See, if you look at the business model, the way we've built it over a period of time, and I, I think we called it out during our investor day also. From the scale perspective, I think we've achieved a significant part of it. We are seeing that the growth is healthy, 40%, 50% quarter-on-quarter. Number of transactions are just moving up. I think it is the point at which the operating efficiency start kicking in. What we did in our LRS was that, you know, I think 24 months from now, we should start seeing a operating break-even. That's where we stand today. Now, this is where, I mean, it's based on current estimate.
Now closer, after we do the next year's LRS, maybe we'll give you a more finer number in which quarter of which year will be break even.
Sure. In Bajaj Markets, you know, are you also looking at a sort of an aggregator model like probably what a Paisabazaar is doing?
Ashish.
As a marketplace, both Paisa Bazaar, as I understand it, and us are not too different online. There they have various manufacturers signed up with them. We do have our own set of manufacturers who have signed up with us. Offline, I'm not sure what you mean by aggregators. That is generally the term used by DSAs or in the offline world. We have our own omni-channel methods, but those are mostly to complete the customer journey and to assist the customers to come online. If you mean doing a DSA business purely offline, then no, that's not the plan.
Got it. Got it. You know, just, talking about IFRS, you know, you did mention that you kind of, you know, work out your numbers, you know, under IFRS 17. I was curious, why would you sort of, you know, not declare those numbers or not follow the IFRS 17 guidelines from June?
See, Nischint, as you know that there is a lot of ambiguity around certain assumptions which one has to take while drawing the IFRS numbers. For example, you know, level of aggregation. Currently also different companies who are reporting to IFRS following different methodologies. The given the quantum of lack of clarity which is there today in terms of standardizing things across various constituents, I think, it's too early to start publishing these numbers. See, if we were a monoline player, then it was fairly easy, we could have done it.
For a multi-line player like us, taking a call without having any clarity from the regulator or the industry as such, you know, even the council can decide, may not be the right thing because we will end up reporting something and then you have to tweak it a little later. As a industry at a council level, we've been, you know, working jointly with the other insurers to bring some kind of uniformity in terms of various decisions one has to take. Either the regulator can decide and let us know, for which I am told that a committee has been formed and soon we should get some clarity on some of these matters, or as a industry we will have to take a call. This is just one example.
There are many more things, you know, like for example, what are the tax repercussions on whatever calls we will take on the opening adjustments, what will be the tax repercussions. There are multiple such things on which clarity is still awaited, and hence, we don't believe it's wise to go live before clarity emerges either from the regulator or from the council, and there's uniformity across players. This is where we stand today. Hence, you would have seen in most of the companies who've announced their results have anyway said that they are seeking forbearance for a year, barring some of the monoline ones because they are relatively in a easier position.
Amongst the multi-line players in GI and even the larger players on the life side, I think everybody is in a similar situation and awaiting clarity. Hopefully from April 1st,2027, you will see most of us start publishing the numbers.
Just one, small one on the health side, right? On the retail health side, we have seen a fair amount of, you know, growth in retail health business, you know, post the GST cut. You know, how do we, you know, how has been the trend with you? Because we just get to see the overall, you know, growth number. We don't get to see the split between new and renewal. If you could give some color on that.
Vij, you wanna take that?
No, I'm there on that. Sorry to cut you off.
Oh, sorry. Okay. Okay.
If you look at the retail health, like, if you ask the GST.
The wealth company is being set up under Bajaj Finance.
Got it. Thanks. Those were my questions, and all the best.
Thank you, Nischint.
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.
Thank you for all the nice questions. I think there was one question which is lying unanswered. Nidhesh will just re-reply to that offline. Thank you everybody. Have a good evening.
Thank you.
Thank you. On behalf of Bajaj Finserv Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.