(i) Motilal Oswal Home Finance ( previously Aspire Home Finance Corporation Limited ) is a professionally managed housing finance company incorporated on 01.10.2013, with a unique combination of financially sound and technically experienced promoters who are well known in their domain for professional ethics and strong execution capabilities.

(ii) Motilal Oswal Home Finance works on the business philosophy of financial inclusion of Lower and Middle Income (LMI) Indian families by providing them access to long term housing finance. Motilal Oswal Home Finance is a subsidiary of Motilal Oswal Financial Services Limited (MOFSL). MOFSL is a well-diversified, financial services company focused on wealth creation for all its customers, such as institutional, corporate, HNI, and retail. To whom Motilal Oswal Home Finance Ltd. (MOHFL) lends?

a) It provided home loans to individuals and families for purchase, construction, and extension of the house.

b) It provides loans for repair and renovation of houses and home loans to families in the new to credit, self-employed, cash salaried category where formal income proofs, Credit Bureaus reports are not easily available, and the repayment capacity of such families are appraised based on their cash flows and Internal Score Cards.

Presence as on 31.03.2022:

MOHFL is operating in twelve states – Haryana, Uttar Pradesh, Delhi, Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Rajasthan, Chhattisgarh, Tamil Nadu, Telangana, and Andhra Pradesh. MOHFL now has 110 Branches across these nine states.

Loan book size as on 31.03.2022

MOHFL’s total outstanding loans in FY22 stood at R 3,435 crores. Loan book has reduced as compared to last year on account of sale of NPA book to ARC during the year.

Underwriting:

In the business of lending, underwriting is the single most parameter which one should look in order to make an investment in the company. Underwriting is a process of distribution of loans. If the company has a robust process for underwriting, then chances of NPAs get reduced considerably. Now, let us see how MOHF does underwriting?

a) The loan approval process at MOHFL is in 4 layers of an approval process based on the ticket size of the loan.

b) Approvals of lending proposals are carried out by various authorities from Cluster Credit Head to National Credit Head.  Approvals beyond certain limits are referred to as the Chief Operation Officer. An additional layer of in house legal and technical makes the underwriting process more robust.

c) There is a Dedicated Risk Containment Unit (RCU) in the Company to minimize fraud related to income documents, profiles, and collateral.

Borrowing:

Lending is a business where we need money to give money.  MOHF first arranges money and then distributes it to the people in the economy to buy a new house or reconstruct. Now, how MOHF arranges fund?

a)  From banks by a way of term loan.

b) NCD by issuing commercial paper. MOHFL total borrowings as of March 31, 2022, of Rs 1,860 crores. And, the cost of borrowing in FY22 at 9.60%. A journey of Motilal Oswal Home Finance

2014:

(i) Commencement of Business Operation on 22.05.2014.

(ii) The first disbursement booked in Akola Branch in June 2014.

(iii) The loan book crossed 50 Cr.

2015:

(i) Presence across 14 locations.

(ii) Total staff: 160 employees.

(iii) Loan book at 357 Cr with 3565 live accounts.

(iv) Year-end PAT at 18 Cr CRISIL upgrades rating for long term borrowings from "A/Stable" to "A+/Stable“ Loan book crosses 550 Cr with 5,500 Cr live loan accounts Present at 23 locations.

2016:

(i) Present in 51 Locations with employees count of 500.

(ii) PAT for the years at 40 Cr.

(iii) Received the first 50 Brand 2016 award by WCRC. (iv) Presence extended to 62 locations.

2017:

(i) Awarded second prize for best performing Primary Lending Institution under CLSS for EWS/LIG by the Ministry of Housing and Urban Poverty Alleviation.

(ii) Expanded to 6 new states with a presence in 121 locations with a staff count of 1049.

(iii) loan Book of 4165 Cr with 46,142 live accounts.

2018:

(i) 4682 Cr of the loan book.

(ii) Capital Infusion by MOSFL of Rs. 150 Cr.

(iii) Strengthening of a core team.

(iv) Strengthening Credit & Risk

Key Highlights of FY17-18

(i) Loan book- 4,863,+17% YoY

(ii) NIM – 4.1% NNPA-3.3%

(iii) Provision Coverage – 35%.

(iv) Debt to equity - 4.9x.

(v) Cost to income - 38%.

(vi) Capital adequacy - 38%

Key Highlights of FY18-19

(i) They cater to pure-retail affordable housing space through Motilal Oswal Home Finance (previously known as Aspire Home Finance Corporation).

(ii) During the year, they concentrated efforts on re-building the home finance business in terms of processes, systems, manpower, and structure to strengthen the business. As a result, they have followed a conservative approach in disbursements which stood at Rs 290 crores in FY2019.

(iii) The loan book stood at Rs 4,357 crores across 52,000+ families as of Mar 2019.

(iv) The average ticket-size continued to be lower at Rs 8.5 lakhs in FY2019. They have put in place a vertical organization structure comprising sales, credit, collection, and legal team.

(v) The implementation of the cluster-level credit layer along with 5 layer credit approval system based on loan ticket sizes and differentiated pricing methodology for loans based on risk type should likely result in improved underwriting, going forward.

(vi) Macro-economic events like demonetization, RERA, and GST and absence of the collection engine coupled with a lack of vertical structure earlier led to a surge in NPAs. This year they have written off loans worth Rs. 290 crore in FY2019 as a conservative policy. They are expecting the recoveries from write off the pool, given the robust collections and legal team now in place.

(vii) Motilal Oswal Group has infused Rs 200 crores during the year and this takes the total capital infused to Rs. 850 crores.

(viii) There ~57% of the borrowings come from the capital markets in the form of NCDs and ~43% from banks.

Key Highlights of FY19-20

(i) The loan book stood at 3,667 crores across 47,900 families as of March 2020.

(ii) In FY20, MOHF has sold assets worth 595 cr to Phoenix ARC for consideration of 293 cr this has resulted in a significant reduction of the GNPA & NNPA rates to 1.81% and 1.36% respectively. This has resulted in getting funds at a lower cost.

(iii) The company this year has boosted its all 4 verticals which are pillars in the lending business i.e. sales, credit, collection, and legal. Currently, they have 430 employees in these verticals. They have also learned from the past and working vigorously to streamline their underwriting.

(iv) MOHFL also received credit rang upgrade amid challenging environment based on several positive changes undertaken. CRISIL has upgraded MOHFL’s rang to AA- (stable) from earlier A+ (stable).

(v) In FY19-20, the MOHF has distributed loan worth Rs 190 crores for home purchase, construction, repair, and renovation. The disbursement of loans has been done with collateral first policy and after passing through several stringent checks and balances. This shows that the company is putting a lot of effort into underwriting, to reduce NPAs in the future.

Key Highlights of FY20-21

(i) Loan book stands at Rs. 3,512 crores as on 31st March, 2021

(ii) Net Worth of Rs.910 crores as on 31st March, 2021

(iii) Profit stood at Rs. 40 crores during FY21.

(iv) NIM – 6.1%.

(v) GNPA – 2.2% and NNPA – 1.5% (

vi) Disbursements in FY21 grew by 42% YoY to Rs.273 crores.

(vii) Raised Rs. 1,477 crores in FY21 at 7.5%.

Key Highlights of FY21-22

1. They have clocked highest PAT of 95 Cr in FY22 in their history of operation. Last year the profit was 40 Crores. This is possible as they have reduced the finance cost by ~60 Crores in Fy22 as compared with Fy21.

2. In FY22, Motilal Oswal Home Finance has disbursed close to ~643 Crores of loans which is up by 133% as compared to previous year.

3. They have expanded their sales team in FY22 and currently, they have 600+ team. Moreover, they have entered into three nee geographies i.e. Haryana, Delhi and Uttar-Pradesh.

4. As on 31.03.2022, the loan book stands at 3485 Crores across 48412 families.

5. In FY22, they have also reduced their cost of borrowing by 105 Basis points and currently stands at 8.2%.

6. NIM in Fy22 were 7.3%

7. As on 31.03.2022, Gross NPA stands at 1.6% and Net NPA at 0.9%.

8. The PMAY Portal which they launched in 2021 to acquire customers via digital mode get very good response in Fy22.

9. The Parent company Motilal Oswal Financial Services has done capital infusion of 850 Crores in Fy22 in the company.

10. MOHFL total borrowings as at March 31, 2022 of Rs. 2,606 crores were within the permissible limits of 12 times of net owned funds.

11. Book Value as on 31.03,2022 is Rs.1.67 per share. CMP of Motilal Oswal Home Finance is Rs.12 per share. So, P/B is 7.18x (which is overvalued).

Key Highlights of FY22-23

1. The Net Interest Income (NII) was ₹312.86 crore, which is a significant improvement from ₹271 crore in FY22

2. The total expenses of the company decreased from ₹408 crore to ₹356 crore

3. The company's provisioning is ₹18.93 crore in 2022-23.

4. Net profit is ₹136 crore in 2022-23 which was ₹ 95 crore in the previous year, up by 43.15%, as they have reduced provisioning by 54 crore.

5. The company's loan book has also increased by 9% to ₹3,808 crore.

6. As on 31st March 2023, GNPA stand at 1.07 and Net NPA at 0.55%.

7. Motilal Oswal Home Finance's book value stands at 1.9, This gives the company a price-to-book (P/B) ratio of 5.13x, which suggests that the company may be overvalued.

Key Highlights of FY23-24

1. Interest Earned increased from ₹513 crore in 2023 to ₹558 crore in 2024, up by ₹45 crore. Net Interest Margin (NIM) is currently standing at 7.6%

2.Finance Cost went up from ₹218.5 crore in 2023 to ₹250 crore in 2024, rising by ₹31.5 crore. Operating Expenses is up by 30% 

3.Provisioning decreased from ₹19 crore in 2023 to ₹12 crore in 2024, down by ₹7 crore.

4. As of March 2024, Gross Non-Performing Assets (GNPA) further inproved, stood at 0.86% and Net Non-Performing Assets (NNPA) at 0.55%.

5. Profit After Tax (PAT) slightly decreased from ₹136 crore in 2023 to ₹132 crore in 2024, a reduction of ₹4 crore.

6. As of March 2024, Company’s loan book stood at ₹`4,048 crore, reflecting a year-on-year growth of 6%.

7. Presently, It operates across 12 states/union territories through 110 branches.

8. Disbursements in FY 2024 crossed 1,000 crore mark to reach 1,018 crore.

9. Company’s book value stands at 2.13, This gives the company a price-to-book (P/B) ratio of Approx 7x, which suggests that the company is overvalued.