Shriram Finance’s stock slipped about 2% on Friday, even after a strong rally earlier this week.
Share price reaction
The share price fell to around ₹957 per share, down from a six‑day high of ₹983.7. The dip came after the stock had risen 16% over the previous six sessions.
MUFG’s investment
On Dec 19, MUFG Bank announced it will buy a 20% stake in Shriram Finance for about ₹39,600 crore (≈$4.4 bn). The shares were priced at a floor of ₹840.83, and MUFG will receive roughly 47.11 crore new shares.
What the deal means
- It is the largest foreign direct investment in India’s financial sector.
- Analysts expect the capital will strengthen Shriram’s balance sheet and support future growth.
- Some brokers have raised their target prices, hoping for a possible credit‑rating upgrade.
- The larger equity base may dilute earnings in the short term.
Management’s view
MUFG’s senior executive said the firm is happy to be a “significant minority stakeholder” and has no plans to increase its holding beyond 20% or to invest in other Shriram Group businesses. The Shriram Finance executive vice‑chairman added that the company does not plan to become a bank and will continue to focus on its current NBFC model, which he says offers flexibility for retail lending.
Investor outlook
Despite the recent pull‑back, the stock has risen around 11% in the past five days and over 12% in the last month. Over the past six months it is up about 37%, with a current price‑to‑earnings ratio of roughly 19.
Remember, this is just an overview, not a prediction. Do your own research before making any investment decisions.