Shriram Finance jumps 2% as CARE upgrades rating to AAA after MUFG deal

Shares of Shriram Finance Ltd. jumped up to 2% in early trading hours today to hit an intraday high of Rs 976.35, after the non-bank lender received its first credit rating upgrade since announcing a strategic deal with Japan’s MUFG.

CARE Ratings has upgraded the credit rating on Shriram Finance's non-convertible debentures and subordinate debt worth ₹2,500 crore to "CARE AAA; Stable" from "CARE AA+; Stable".

The credit upgrade comes as there were developments which include operational and financial performance for FY25 and FY26, the rating agency noted.

The rating agency has also reaffirmed the rating of "CARE A1+" on the company's commercial paper. 

MUFG Bank of Japan is going to pick up a 20% stake in Shriram Finance for an investment of ₹39,618 crore or $4.4 billion. This deal marks the Japanese bank’s largest-ever investment in India and surpasses its earlier cumulative investments of $1.7 billion. 

Motilal Oswal Financial Services in its recent report has suggested that a revised rating post MUFG deal would be an upgrade.  "We view this transaction as a strategically significant and value-accretive development for SHFL. MUFG’s investment is expected to support the company’s next phase of growth by providing long-term capital to accelerate expansion across core segments, including CV and MSME lending, while strengthening balance sheet resilience through enhanced creditworthiness and funding capacity," the report stated.

The analysts at MOFSL also pointed out that the entry of MUFG marks a key strategic inflexion point. This move would enable a structural reduction in cost of funds (CoF) through enhanced balance sheet credibility, expand SHFL’s ability to competitively serve a wider customer base, including lower-yield new CV financing, reinforce long-term franchise strength, market positioning, and competitive advantage, and unlock synergies in technology, innovation, and

customer engagement, driving sustainable growth.

Shriram Finance continues to deliver sector-leading performance, driven by broad-based loan growth, a diversified product mix, and disciplined risk management. Over the past 6-9 months, the franchise has outperformed peers, supported by sustained demand in the used-vehicle segment and resilience across its core customer base.