DBT Bureau
Pune, 10 Jan 2026
In a significant development for India’s leading non-banking financial company (NBFC), Moody’s Ratings has revised the outlook on Shriram Finance Limited (SFL) to positive from stable, while affirming its Ba1 long-term corporate family rating.
The positive outlook, announced on January 9, 2026, comes on the heels of Shriram Finance’s landmark strategic partnership with Japan’s MUFG Bank (a subsidiary of Mitsubishi UFJ Financial Group). MUFG plans to acquire a 20% stake in SFL through a preferential allotment of shares valued at approximately ₹39,618 crore (about $4.4 billion). The deal, which is pending regulatory approvals, is expected to close in 2026 and marks one of the largest cross-border investments in India’s financial sector.
This transformative investment is set to supercharge Shriram Finance’s growth trajectory. Moody’s highlights the following key benefits:
- Massive Capital Boost — On a pro forma basis, SFL’s tangible common equity to tangible managed assets (TCE/TMA) ratio is projected to surge to over 29% (from around 19% as of March 2025), making it one of the strongest-capitalized rated NBFCs in India. The ratio is expected to stay comfortably above 20% for the next 4–5 years, even with robust credit growth.
- Lower Funding Costs & Better Access — The capital infusion will diversify funding sources, open doors to global channels, and enhance risk management. SFL anticipates funding costs could drop by around 100 basis points over the next two years, driven by central bank rate cuts and MUFG’s strategic support.
- Improved Profitability & Liquidity — Profitability is expected to rise over the next 12–18 months, while the 12-month debt maturity coverage ratio could jump to over 90% (from 31% as of March 2025). Liquidity will strengthen significantly post-infusion.
- Stable Asset Quality — Moody’s expects continued stability, backed by strong underwriting, high collateralization, and a favorable macroeconomic backdrop.
As of September 30, 2025, Shriram Finance reported consolidated assets of ₹2.99 trillion (≈$33.2 billion). Headquartered in Mumbai, the company is a powerhouse in retail lending, particularly vehicle financing, serving rural and semi-urban markets across its vast network.
Moody’s emphasized that the rating does not yet incorporate any formal affiliate support from MUFG, though stronger integration could prompt future reassessments.
This blockbuster deal and the upgraded outlook signal strong confidence in Shriram Finance’s future — positioning it for accelerated growth, enhanced competitiveness, and potential rating upgrades in the coming years!
Shriram Finance shares closed at ₹975.40 in the previous trading session.
