Motilal Oswal Home Finance Limited

Motilal Oswal Home Finance Limited :


Motilal Oswal Home Finance Limited (MOHFL) (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.

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.

MOHFL lends to whom? It provided home loans to individuals and families for purchase, construction, and extension of the house.

It provides loans for the repair and renovation of houses

Home loans to families who are 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.

Motilal Oswal Unlisted Shares

About the Company

  • MOHF 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.
  • MOHF 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.
  • Motilal Housing Finance Limited (MOHFL) is a professionally managed housing finance company.
  • The Company was incorporated on October 01, 2013.
  • It is registered with National Housing Bank and has 110 branches and around 1300 employees across 9 states – Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Rajasthan, Chhattisgarh, Tamil Nadu, Telangana, and Andhra Pradesh.

Products Offered

Home Loans

  • to acquire a ready /under construction residential property/construction of a residential property on own land. MOHF also provides loans to refinance home loan availed by the customer from other Banks / HFCs.
  • Loan Amount - Minimum 5 Lakhs & Maximum 25 Lakhs

Home Improvement Loans

  • for the renovation of an existing space for a more comfortable environment and a better quality of living.
  • Loan Amount - Cap of 85% of the estimated cost of improvement or Rs. 5 Lacs (whichever is lower)

Home Extension Loans

  • To make an extension to your existing home. MOHFL provide loans to construct additional room/s or floor within the permissible building plan.
  • Loan Amount - Minimum 5 Lakhs & Maximum 25 Lakhs (Cap of 85% of the cost of construction)

Construction Loans

  • is extended to construct residential premises either from a contractor or contractual builder on a freehold owned plot of non-agricultural land as per plan approved by the local authority.
  • Loans covering up to 85% of the construction cost, Maximum 25 Lakhs

Industry Overview - Opportunities

  • Indian home loan market is anticipated to grow at a brisk rate of around 22% during 2021 - 2026 on account of increasing urbanization and affordable mortgage rates.
  • The total portfolio of new Affordable Housing Finance Companies (AHFCs) in affordable housing space stood at INR 55,061 crore as of September 30, 2020, and registered a moderate year-on-year growth of 9%.
  • AHFCs have grown faster than the industry in the past five years (26% growth in December 2019). Demand is expected to revive faster in this segment leading to high double-digit growth, led by anticipation of a faster revival of rural economy and niche availability by lenders.
  • The long-term growth outlook for the sector remains positive given the largely underserved market, favourable demographic profile, housing shortage and government support in the form of tax sops and subsidies. The growth would pick up to 12-15% in FY 2022.
  • As per ICRA, over the medium and long term, it is expected the industry to grow in the range of 7-8% driven by growth in affordable housing space and easing out of liquidity concerns. As per CRISIL report, India’s Mortgage Penetration Expected to Touch 15% by 2024 from currently 12.4%.
  • As per ICRA estimate loan book growth for HFC would be 6-8% for FY21.

Business Performance

  • Motilal Oswal Home Finance has disbursed INR 190 Crores during FY 2020
  • Average loan size of INR 8.8 lakhs
  • The average tenure of the loan given is 15 years with a loan limit of INR 25 lakh
  • Geographical reach across 9 states with 110 branches.
  • Collection team of 450+ members along with a robust legal team
  • Catering to 47,900+ families
  • Average LTV of 58% as of March 31, 2020
  • Total staff counts of 1,184 employees

Financial Performance

  • The loan book stands at INR 3,667 crores as of 31st March 2020
  • In FY20 MOHFL back in profit (INR 39 crores) after posting losses in FY19 on account of accelerated provisioning.
  • NIM – 5.3%, Spread – 4.3%
  • GNPA – 1.81% and NNPA – 1.36%
  • Provision coverage – 66%
  • Debt to Equity – 3.4x
  • Cost to Income – 41%
  • Capital adequacy – 47.58%

Financial Highlights

Revenue

  • During the FY19-20, the Company earned a gross income of INR 576.44 crores as against INR 648.41 crores in the previous year.

Profit After Tax (PAT)

  • The Net Profit after tax was INR 39.07 crores as against a Loss of INR 136.88 crores in the previous year.

Earnings Per Share (EPS)

  • The Company witnessed a positive EPS of 0.07 per share as compared to the EPS of the previous year.

Rationale

  • During the FY19-20, MOHFL disbursed loans amounting to INR 190 crores for home purchase, construction, repair and renovation. Cumulative disbursements as of March 31, 2020, stood at INR 6,522 crores.
  • MOHFL’s disbursements remained on a conservative scale as efforts were concentrated on strengthening and re-building the processes and people amid a weak environment. During the year, MOHFL disbursed loans amounting to INR 190 crores for home purchase, construction, repair and renovation.
  • Cumulative disbursements as of March 31, 2020, stood at INR 6,522 crores.
  • MOHFL’s total outstanding loans in FY20 stood at INR 3,667 crores led by cautious disbursements.
  • MOHFL NPAs as of March 31, 2020, were INR 66 Crores in respect of individual home loans. MOHFL carries NPA provisions of INR 16 crores. MOHFL gross NPAs are 1.81% and Net NPAs are 1.36% on total outstanding loans of INR 3,667 Crores as of March 31, 2020.

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