ICRA has placed Shriram Finance Limited’s long-term rating of [ICRA]AA+ on Watch with Positive Implications following the announcement of a proposed equity infusion of Rs. 39,618 crore by MUFG Bank Ltd. The transaction, expected to conclude in 2026, would result in MUFG holding a 20% stake in SFL, significantly improving SFL’s capitalization profile and credit risk profile.
ICRA Revises Rating Outlook
ICRA has announced that the long-term rating for Shriram Finance Limited (SFL) has been placed ‘on Watch’ with positive implications. This decision follows a review and is primarily driven by a proposed equity infusion that is expected to strengthen SFL’s financial position.
Details of Equity Infusion
On December 19, 2025, SFL’s board approved raising Rs. 39,618 crore of primary equity capital through a preferential issue on a private placement basis from MUFG Bank Ltd. Upon completion, MUFG will hold a 20% stake in SFL. The transaction is subject to shareholder and regulatory approvals and is anticipated to be concluded in 2026.
Expected Benefits
The equity infusion is expected to significantly improve SFL’s capitalization profile, providing a substantial buffer for growth and managing asset quality. This, in turn, will strengthen its credit risk profile, improve financial flexibility, and enhance earnings performance. The investment from MUFG is also expected to improve SFL’s cost of funding.
Rating Drivers
The rating continues to factor in SFL’s leadership position in the preowned commercial vehicle (CV) financing segment, an established track record, brand, and strong customer reach. As of September 2025, SFL is the second-largest NBFC in India by AUM, with 74% of its AUM focused on vehicle financing.
Asset Quality
SFL’s gross stage 3 assets declined to 4.6% as of September 2025, from 5.3% as of September 2024. ICRA acknowledges SFL’s track record of managing credit costs, though asset quality remains monitorable.
Liquidity and Funding
As of September 30, 2025, SFL had lien-free on-balance sheet liquidity of Rs. 8,390 crore, supported by unutilized funding lines of Rs. 8,160 crore. SFL has consistently maintained a high liquidity coverage ratio of 297% for the quarter ended September 30, 2025.
Source: BSE
