Motilal Oswal Home Finance Ltd Unlisted Shares

Motilal Oswal Home Finance Limited is the housing finance subsidiary of Motilal Oswal Financial Services Limited. It is a professionally managed Housing Finance Company (HFC), focused primarily on providing affordable housing finance to Low-Income Group (LIG) and Middle-Income Group (MIG) households.The company operates across 12 Indian states, with a particular focus on Tier-2, Tier-3 and emerging urban markets. Its business philosophy revolves around financial inclusion by providing long-term housing finance to underserved Indian households, particularly customers who may have limited formal income documentation or credit histories.

Business Model

MOHFL primarily generates revenue through interest income earned on loans extended to individual borrowers and businesses against property.

Its business model can be divided into the following activities:

1. Loan Origination: Identifying and acquiring customers seeking finance for purchasing, constructing or extending residential properties.

2. Credit Assessment: Evaluating borrower repayment capacity through income assessment, credit bureau information, field verification and internal scoring models.

3. Loan Disbursement: Providing secured housing loans and loans against property, generally with long repayment tenures.

4. Interest Income Generation: Earning interest on the outstanding loan portfolio.

5. Fee-Based Income: Generating additional revenue through processing fees and other commission-related services.

6. Collections and Recovery: Managing loan repayments through an in-house collection infrastructure to maintain portfolio quality.

   Product Portfolio

   Home Purchase Loans

   Provides financing for purchasing ready-to-move or under-construction residential properties, constructing a house on owned land, and refinancing existing home loans from other banks or Housing Finance Companies (HFCs).

   • Loan Amount: ₹5 lakh – ₹50 lakh

   • Loan Tenure: 5–25 years

   Home Construction Loans

   Offers financial assistance to individuals constructing residential properties on their owned non-agricultural land, with loan disbursements made in stages according to construction progress.

   • Loan Coverage: Up to 85% of construction cost

   • Maximum Loan Amount: ₹50 lakh

   • Loan Tenure: 5–25 years

   Home Extension Loans

   Provides financing for expanding existing residential properties through the construction of additional rooms or floors, subject to approved building plans and verified construction estimates.

   • Loan Coverage: Up to 85% of extension cost

   • Maximum Loan Amount: ₹25 lakh

   • Loan Tenure: 5–25 years

   Loan Against Property (LAP)

   Enables customers to leverage their existing residential property to raise funds for business working capital, education, marriage, emergencies and other financial requirements.

   • Loan Amount: ₹5 lakh – ₹40 lakh

   • Loan Tenure: 5–15 years

   Construction Finance

   MOHFL also maintains a selective presence in construction finance, providing financing within the construction and housing sector.

   Industry Data
   

   The Indian housing finance industry presents significant long-term growth potential, driven by urbanisation, rising household incomes, increasing demand for homeownership and government initiatives supporting affordable housing. As per the industry data referenced in the company’s FY26 report, India’s individual housing loan portfolio stood at approximately ₹33 lakh crore in FY25 and is projected to reach ₹77–81 lakh crore by FY30, representing an expected CAGR of 15–16%. Despite this growth potential, housing loan penetration in India remains relatively low at around 16.6% of GDP, compared with 64% in the UK and 60% in the US, indicating considerable scope for expansion. Additionally, approximately 45% of HFC housing loan portfolios comprise loans of up to ₹25 lakh, highlighting the importance of the affordable housing segment. The residential real estate market has also witnessed growth, with residential sales reaching 4.6 lakh units in 2024, representing a 74% increase since 2019.

   The industry’s growth is supported by increasing demand for affordable housing, particularly among economically weaker sections (EWS) and low-income group (LIG) households, along with migration towards Tier-2 and Tier-3 cities. Government initiatives such as the Pradhan Mantri Awas Yojana (PMAY) further support affordable homeownership. In addition, the formalisation of income through banking, GST and digital payment systems is improving access to institutional housing finance. Low mortgage penetration provides further opportunities for long-term industry expansion, while technology adoption, including digital underwriting, alternative credit assessment and automated loan processing, is helping housing finance companies improve lending efficiency.

   Industry Challenges

   • Limited income documentation among self-employed and informal-sector borrowers.

   • Higher credit assessment and collection costs in affordable housing finance.

   • Interest rate fluctuations affecting borrowing costs and housing affordability.

   • Competition from banks, established HFCs and fintech lenders.

   • Potential deterioration in asset quality during economic downturns.

   Regulatory Environment

   The sector operates under the regulatory framework of the Reserve Bank of India (RBI), with housing finance companies subject to applicable housing finance regulations.

   Important regulatory developments highlighted in the FY26 report include:

   • Strengthened KYC and customer due diligence requirements.

   • Restrictions on prepayment penalties for specified floating-rate individual housing loans.

   • More frequent credit information reporting.

   • Revised project finance prudential requirements.

   • Enhanced related-party transaction disclosures and monitoring.

   Financial Performance
   

   Motilal Oswal Home Finance Limited has demonstrated a recovery in profitability and growth in its operating income over the period from FY19 to FY26. The company’s total income increased from ₹648.41 crore in FY19 to ₹800.82 crore in FY26, while revenue from operations grew from ₹641.47 crore to ₹800.21 crore during the same period. In FY26, revenue from operations increased by 27.03% compared with ₹629.95 crore in FY25. Interest income rose from ₹607.70 crore in FY25 to ₹719.46 crore in FY26, while fee and commission income increased from ₹19.44 crore to ₹46.90 crore, indicating higher contribution from these revenue streams.

   On the profitability front, the company reported an operating EBITDA of ₹214.44 crore in FY26, compared with ₹150.35 crore in FY25, while EBITDA increased from ₹171.97 crore to ₹215.05 crore. Profit before tax (PBT) stood at ₹208.60 crore, compared with ₹166.42 crore in the previous financial year. Profit after tax (PAT) increased to ₹158.84 crore in FY26 from ₹130.26 crore in FY25, registering a growth of approximately 21.9%. The PAT margin, however, moderated slightly from 19.99% to 19.83%. Finance costs increased from ₹267.50 crore in FY25 to ₹326.13 crore in FY26, while impairment losses on financial instruments rose from ₹1.65 crore to ₹15.95 crore.

   In terms of return ratios, the company reported a return on average equity (ROAE) of 10.46% in FY26, compared with 9.59% in FY25, while return on average capital employed (ROACE) stood at 3.67%. The debt-to-equity ratio increased from 2.60x in FY25 to 2.87x in FY26. According to the company’s FY26 disclosures, assets under management (AUM) reached ₹5,829 crore, registering 19% year-on-year growth, while disbursements increased by 13% to ₹2,021 crore. The company also reported net interest income of ₹394 crore and net interest margin of 7.0% during FY26.