Shriram Finance’s shares climbed about 2% on Dec 30 after its credit rating was upgraded.
Credit rating moves to CARE AAA
CARE Ratings raised the rating on Shriram’s non‑convertible debentures (₹2,369 cr) and subordinated debt (₹156 cr) to “CARE AAA; Stable”, up from “CARE AA+; Stable”. The agency said the upgrade reflects the company’s strong operational and financial performance in FY25 and the first half of FY26.
CARE also kept its “A1+” rating for the firm’s commercial paper.
MUFG buys 20% stake
On Dec 19, MUFG Bank agreed to buy a 20% share of Shriram Finance for ₹39,600 cr (about $4.4 bn) through a preferential issue. The issue was priced at ₹840.83 per share, and MUFG will receive 47.11 cr shares. This is the biggest foreign direct investment in India’s financial sector.
Why the upgrade matters
- Stronger balance sheet after the MUFG capital infusion.
- Better growth outlook for vehicle and tractor loans.
- Analysts have raised target prices, though earnings may be slightly diluted by the larger equity base.
Q2 FY26 results
For the quarter ending Oct 2024, Shriram reported:
- Net profit: ₹2,315 cr, up 11.6% YoY.
- Net interest income: ₹6,026 cr, up 10% YoY.
- Pre‑provision operating profit: ₹4,446 cr.
- Net interest margin: steady at 8.19%.
Share price performance
Since the rating upgrade, the stock has risen:
- >3% in the last five days.
- >14% over the past month.
- >38% in the last six months.
- Around 67% so far in 2025.
The current price‑to‑earnings ratio is about 19.
Bottom line
The rating upgrade and MUFG’s investment have boosted confidence in Shriram Finance, giving the stock a short‑term lift and improving its long‑term outlook.
Remember, this is just an overview, not a prediction. Do your own research before making any investment decisions.