Shriram Finance’s stock has surged dramatically after Japan’s MUFG Bank bought a large stake in the company.
Deal Overview
MUFG Bank agreed to purchase 20% of Shriram Finance for about ₹39,620 crore. The shares were issued at ₹840.93 each, a small discount to the market price at the time. This is one of the biggest foreign investments in India’s non‑banking finance sector.
Share Price Reaction
Following the announcement, the stock climbed to an all‑time high of ₹983.7, up 97% from its 52‑week low of ₹493.60. In the last three months the share price has risen 59%, with a 16% gain in the past month and 12% in the past week.
Analyst Opinions
- Nomura kept a “buy” rating and raised its target to ₹1,140, citing a 24% increase in book value per share.
- ICICI Securities also maintained a “buy” call, setting a target of ₹1,200 based on higher earnings expectations.
- Motilal Oswal described MUFG’s entry as a “defining moment” that strengthens Shriram’s capital and credit profile.
What This Means for Investors
The fresh capital should make Shriram Finance’s balance sheet stronger, lower its funding costs and support growth in vehicle finance, MSME lending and retail segments. Analysts expect the company’s capital adequacy ratio to improve from about 21% to over 30%, which could lead to a better credit rating.
Technical Outlook
Technical analysts note that the stock is forming higher highs and higher lows, a classic sign of bullish momentum. Current support is around ₹845, while the next resistance level could be near ₹1,006.
Disclaimer
The views expressed here are those of individual analysts and not a recommendation. Always do your own research or consult a qualified advisor before making any investment decisions.