Fitch Ratings has placed Shriram Finance Ltd’s long-term foreign and local currency issuer default ratings of ‘BB+’ on Rating Watch Positive. The move follows MUFG Bank’s agreement to acquire a 20% stake in the company, signaling potential rating uplift and stronger shareholder backing for India’s leading non-bank financial institution.
Shriram Finance Ltd, one of India’s largest non-banking financial companies (NBFCs), has received a significant boost from Fitch Ratings. The agency announced that the company’s long-term ratings of ‘BB+’ have been placed on Rating Watch Positive (RWP), reflecting optimism about its future credit profile.
The decision comes after MUFG Bank, a subsidiary of Mitsubishi UFJ Financial Group, agreed to acquire a 20% stake in Shriram Finance. Fitch believes this strategic investment could enhance Shriram’s standalone credit profile, potentially leading to a one-notch rating upgrade.
Key Highlights
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Rating Action: Fitch places Shriram Finance’s ‘BB+’ ratings on Rating Watch Positive.
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Reason: MUFG Bank’s 20% stake acquisition in Shriram Finance.
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Potential Impact: Possible one-notch uplift in credit profile.
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Scope: Includes long-term foreign and local currency issuer default ratings and debt programme.
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Strategic Significance: Stronger shareholder support expected to improve funding diversity and long-term stability.
This development underscores Shriram Finance’s growing appeal to global investors and highlights its strengthening position in India’s NBFC sector.
Sources: Fitch Ratings, CNBC-TV18, Economic Times