Motilal Oswal Home Finance: Best-in-Class Asset Quality, But Can Growt... Motilal Oswal Home Finance: Best-in-Class Asset Quality, But Can Growth Keep Up? Read more

Financial Overview:

After declining in FY22, revenue growth picked up speed again, reaching ₹652 crore in FY25 with a CAGR of roughly 10–11% from FY23 to FY25.

EBITDA margins were maintained between 67% and 75 %, indicating a high-efficiency cost structure, and operating margins remained structurally strong.

With PAT rising more than 3x from ₹40 crore (FY21) to ₹130 crore (FY25), profitability increased dramatically. After FY23, margins stabilised.

After a robust increase in FY22–FY23, EPS plateaued in FY24–FY25, indicating a slowdown in earnings growth.

The balance sheet grew steadily, with capital employed surpassing ₹5,130 crore in FY25 and total assets reaching ₹5,530 crore.

In order to support growth, debt increased to ₹3,703 crore while equity increased to ₹1,429 crore, strengthening net worth along with increased leverage.

Financial Ratios:

If there is one number that defines MOHFL's journey, it is the GNPA. In FY21, after years of aggressive lending to informal-economy borrowers — many hit hard by demonetisation, RERA, and Covid — the gross bad loan ratio stood at a worrying 2.18%. By FY25, it has fallen to 0.84%. That's not incremental improvement. That's a fundamental transformation of how the company lends.

The architects of this change: a 5-layer credit approval system based on loan ticket size, a collateral-first underwriting philosophy, and a vertical team structure separating sales, credit, collections, and legal into distinct accountability zones. It is not glamorous. But it works.

Future Forecast With Assumptions:

Without making aggressive capital raise assumptions, a 14–16% increase in equity is anticipated until FY30, driven by consistent internal accruals and balance-sheet compounding.

Anchored to P/BV multiples of 6–8x, the valuation reflects scenario-wise differentiation based on execution consistency and return ratios.

With a projected FY30 equity of ₹2,413–2,587 crore, the capital base is expected to continue to grow in all scenarios.

With an implied valuation range of ₹14,478–20,694 crore, it captures both upside potential under sustained execution and downside protection in the bear case.

The base case suggests a balanced risk-reward at ₹28.9, while the estimated price per share ranges from ₹23.9 to ₹34.2.

Peer Comparison:

Context matters in finance. MOHFL doesn't operate in isolation — it competes with Home First Finance and Aptus Value Housing Finance, both listed, both aggressive. Here's the honest picture:

Despite having a lower ROE (9.1%), Motilal Oswal Home Finance trades at a clear valuation premium (P/B 5.38x, P/E 59x), suggesting that balance-sheet safety, not earnings strength, is driving pricing.

With YoY revenue growth of 33% and 28%, respectively, Home First Finance and Aptus Value Housing Finance outperform MOHFL's approximately 11%.

With ROEs of 16.5% (Home First) and 18.6% (Aptus) compared to MOHFL's 9.1%, profitability metrics favour peers, with higher ROA and ROCE supporting the former.

With the lowest GNPA (0.84%) and NNPA (0.37%), MOHFL leads in asset quality and demonstrates excellent underwriting discipline.

With a CRAR of 40.8%, comfortably above regulatory requirements, capital strength is still a key differentiator for MOHFL, even though Aptus has a larger buffer.

Conclusion:

Motilal Oswal Home Finance is a rare breed in India's lending landscape — a conservatively managed, CRISIL AA-rated housing finance company with a ₹4,857 crore loan book, best-in-class GNPA of 0.84%, and its highest-ever PAT of ₹130 crore, all built on the back of a decade-long mission to serve borrowers that big banks overlook. The balance sheet is strong, asset quality is exemplary, and the long-term housing story is intact — but at a P/E of 59x with ROE slipping to 9.12% and EPS flat for two consecutive years, the stock is priced for safety, not growth. Currently trading in the unlisted market at ₹12.70 per share, MOHFL suits the patient, risk-aware investor who understands the illiquidity premium that comes with unlisted investing — and sharescart.com continues to track it as one of the most closely watched names in the unlisted space, with a base-case FY30 target of ₹28.89 per share and an eye firmly on any IPO or M&A development that could change the story overnight.