Moody’s Ratings has affirmed the Ba1 Long-Term Corporate Family Rating (CFR) of Shriram Finance Limited (SFL). The outlook has been changed to positive from stable.
On December 19, 2025, SFL announced that MUFG Bank, Ltd. would acquire 20% stake in the company through preferential allotment of shares worth ₹39600 crore (approximately $4.4 billion). The transaction is expected to close in 2026.
“MUFG Bank’s investment will provide strategic benefits, including a stronger capital base, global expertise and access to funding channels, and will further improve SFL’s funding diversity and risk management practices over time,” Moody’s said.
“The positive outlook reflects our expectation that SFL’s business and financial profile will strengthen, supported by a strong strategic shareholder and a significant capital increase. We expect the company’s capitalization to be materially stronger following the transaction, with its profitability gradually improving as its cost of funds declines, while its access to onshore and offshore funding improves.”
“On a pro forma basis, SFL’s capital infusion to tangible common equity to tangible managed assets (TCE/TMA) ratio will increase from around 19% to over 29% by March 2025, making it one of the highest rated non-bank financial companies in India. We expect the company to maintain the TCE/TMA ratio above 20% over the next 4-5 years after considering credit growth Will keep.”
“We also expect SFL profitability to strengthen over the next 12-18 months, supported by lower funding costs due to the gradual transmission of rate cuts by the central bank in 2025, as well as improved funding access post-transaction,” it further said.
The company expects its funding costs to decline by approximately 100 basis points over the next 2 years. The rating agency said continued improvement in profitability is a key monitorable factor for a rating upgrade.
published – January 11, 2026 02:29 am IST
