Motilal Oswal Home Finance Posts Steady Growth In Q3 FY24

Motilal Oswal Home Finance Limited, a key player in the housing finance sector, recently unveiled its Q3 FY24 and nine months earnings report, showcasing robust financial performance amid a dynamic market landscape. The company reported a commendable profit of INR 97.8 crores in the first three quarters of the fiscal year, reflecting resilience and strategic maneuvers.

Q3 Financial Performance

The Net Interest Income (NII) demonstrated a resilient growth of 6% Year over Year (YoY), reaching INR 233.9 crores, while the Net Interest Margin (NIM) stood strong at 7.7% in the same period. These figures underscore the company’s ability to navigate market challenges effectively and maintain a healthy bottom line.

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Asset Quality and Disbursements

Motilal Oswal Home Finance reported an Asset Under Management (AUM) of INR 3,780 crores as of December 2023, reinforcing its substantial market presence. Notably, disbursements in Q3 FY24 reached INR 247 crores, marking an impressive 22.2% YoY increase. The retail disbursement segment witnessed an even more substantial growth of 50% YoY, amounting to INR 178 crores.

The yield on advances in Q3 reached 14.2%, displaying a notable uptick of 40 basis points YoY. The spread, a critical metric for financial institutions, was maintained at 5.9%, emphasizing the company’s commitment to optimizing its lending operations.

Operational Metrics

While the company reported a Cost to Income ratio at 43.1% in 9M FY24, it marked a slight increase from the previous year (37.8%) as the company aggressively hired personnel. During Q3 FY24, the company hired a net 232 Sales Relationship Managers (RM), contributing to a total of 373 Sales RMs hired over the last 12 months. This is going to be a crucial aspect as the company targets the IPO market listing in the coming years.

The Net Gearing stood at 2.0x in Q3, a reduction from the previous year’s 2.2x, showcasing prudent financial management. The Capital to Risk-Weighted Assets Ratio (CRAR) remained robust at 47.5%, underscoring the company’s strong capital adequacy position.

Motilal Oswal Home Finance’s creditworthiness was affirmed by all three major rating agencies (ICRA, CRISIL, and India Ratings), with a stable AA rating. Operating across 111 locations in 12 states, including key regions like Maharashtra, Gujarat, Tamil Nadu, and Uttar Pradesh, the company expanded its reach and increased the number of relationship managers to 856.

Shifting Gears

Motilal Oswal Home Finance is gearing up for a future marked by enhanced productivity. The company aims to achieve this through improvements in Turnaround Time (TAT) and Approval ratios. With new leadership across senior management, the company has laid the groundwork for a substantial ramp-up in disbursements and AUM growth in the coming years.

In a strategic move towards digitalization, Motilal Oswal Home Finance has revamped its sales and lead management processes. Leveraging geotagging and geo-fencing capabilities, the company now conducts sales operations in a fully digital mode. The end-to-end paperless approval process, coupled with an impressive 85% e-signature rate for loan documents, reflects a commitment to efficiency and customer-centricity.

Conclusion

Motilal Oswal Home Finance’s Q3 FY24 earnings report paints a picture of resilience, strategic foresight, and a commitment to digital transformation. The company’s financial indicators, coupled with its geographic expansion and focus on strengthening the sales force, position it favorably for sustained growth in the dynamic housing finance sector. As Motilal Oswal Home Finance navigates the evolving landscape, investors and stakeholders can anticipate a promising trajectory in the quarters to come.