Sector: Financial Services
Motilal Oswal Home Finance Ltd. (MOHFL) major focus has been to provide home loans to individuals and families for purchase, construction and extension of house. MOHFL also 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.
MOHFL had signed a MOU with National Housing Bank (NHB) which is the Central Nodal Agency under the Pradhan Mantri Awas Yojana (PMAY) for the Credit Linked Subsidy Scheme (CLSS). MOHFL has assisted various economically weaker sections of the society to claim subsidy under this scheme.
With a view to enable uniform processing of credit risk assessment, MOHFL has adopted a risk-based pricing methodology. The pricing of each loan is linked to the credit score and credit assessment report. This methodology enables MOHFL to price risk correctly by offering finer interest rates to deserving families, where credit risk is low and charge a higher rate of interest where credit risk is high. The credit score parameters, risk weightage, customer segmentation, collateral technical policy and rate of interest bands are reviewed timely, modified in lines with the changing risk profile of the customers and aligned with the prevailing market rates respectively.
Loan Book Analysis
The above chart shows the state wise loan book mix of the company spread across the states like Maharashtra, Gujarat, Madhya Pradesh, Tamil Nadu, Rajasthan, Karnataka, Andhra Pradesh & Telangana, and Chattisgarh.
The company have a balanced customer mix with 45% of the customers being self-employed and 55% of the customers are salaried.
The above chart shows the state wise disbursement mix from FY17 to FY21.
The above chart shows the Revenue of the company from FY17-FY21.
The above chart shows that Profit After Tax (PAT) of the company from FY17-FY21.
- Disbursements in FY21 grew by 42% YoY to Rs. 273 crores. Business is geared up for growth in disbursements and sales force expansion in currently underway.
- In FY21, total credit cost increased by 16 bps to 2.0% due to acceleration in covid provisioning of standard assets and NPA.
- Cost of borrowing for the company has come down by 95 bps YoY in FY21 to 9.25%. The company raised 1,477 crores in FY21 at 7.5%.
- Company had strong support from Motilal Oswal Financial Services with total cumulative capital infusion from the sponsor at Rs. 8.5 billion resulting into lower net leverage (Debt/Equity ratio) of 8x.
- In FY21, the company have received first refinancing from National Housing Bank and successfully completed first securitization transaction.
- The company has launched PMAY portal and have started on-boarding partners through their Digital MO Partner App.