Moody’s Ratings has affirmed Shriram Finance Ltd’s (SFL)Ba1 long-term corporate family rating (CFR). The outlook has been changed to positive from stable.
On December 19, 2025, SFL announced that MUFG Bank, Ltd. would acquire a 20% stake in the company through a preferential allotment of shares for ₹39600 crore (about $4.4 billion). The transactionis expected to close in 2026.
“The investment by MUFG Bank will providestrategic benefits, including a stronger capital base, access to global expertise and funding channels, and willfurther 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, supportedby a strong strategic shareholder and a significant capital increase. We expect the company’s capitalization will materially strengthen after the transaction, its profitability to gradually improve as its cost of funds declines, whileits access to onshore and offshore funding will improve,” it said.
“On a pro forma basis, the capital infusion will strengthen SFL’s tangible common equity to tangible managedassets (TCE/TMA) ratio to above 29% from around 19% as of March 2025, one of the highest amongst rated non-bank finance companies in India. We expect the company to maintain a TCE/TMA ratio above 20% over thenext 4-5 years after considering the credit growth,” it added.
“We also expect SFL’s profitability to strengthen over the next 12–18 months, supported by lower funding costsbecause of a gradual transmission of rate cuts by the central bank in 2025, as well as improved funding accesspost transaction,” it further said.
The company expects its funding costs to decline by about 100 basis points over the next 2years. A sustained improvement in profitability is a key monitorable for the rating upgrade, the rating agency said.
Published – January 11, 2026 02:29 am IST
