Motilal Oswal mulling sale of housing finance subsidiary: Report

According to data from Crisil, Motilal Oswal’s housing finance business had a standalone net worth of Rs 1,290 crore as of March 31, 2024.

Motilal Oswal is reportedly anticipating to exit the home finance business and has put its housing finance arm, Motilal Oswal Home Finance, up for sale. As per sources cited in a Mint report, the Mumbai-based financial services group has appointed investment bank Avendus Capital to identify potential buyers for the stake, currently held by Motilal Oswal Financial Services Ltd and its wholly owned subsidiaries, amounting to a 97.49 percent share in the housing finance business.

The latest development comes amid rising deal activity in the affordable housing sector, with private equity investors and primary markets showing significant interest in recent months.

Moneycontrol could not independently verify the report.

While it is unclear how much the stake might fetch, the company's valuation could be calculated by comparing it to its listed peers in the affordable housing space, such as Aadhar Housing Finance, Aavas Financiers, Aptus Value Housing Finance India, and Home First Finance Company, which are currently trading at 2.8-3.9 times their book value. According to data from Crisil, Motilal Oswal’s housing finance business had a standalone net worth of Rs 1,290 crore as of March 31, 2024. Using peer valuation, this could place the company's value between Rs 3,612 crore and Rs 5,031 crore, states the report.

However, Motilal Oswal Home Finance had denied reports of a potential sale, states the Mint report. A company spokesperson, cited in the report, has noted that there was no development regarding the sale of the business.

Motilal Oswal Home Finance, which began operations in 2014 as Aspire Home Finance Corp. and rebranded in 2019, had a loan book of Rs 4,098 crore as of June 30, 2024, according to Crisil. The loan book was Rs 4,048 crore as of March 31, 2024. Despite facing asset quality challenges, with gross non-performing assets (NPAs) rising to 9.2 percent of loans in FY19, the company has implemented remedial measures, including system strengthening, managerial support, increased oversight, and capital infusion.