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Shriram Finance Limited (SFL) has announced that ICRA Limited has placed the company's Long-Term Rating on Watch with Positive Implications. This rating action applies to both the Fixed Deposit Programme and the Non-Convertible Debenture Programme, which were previously rated [ICRA]AA+ (Stable).

The rating watch is linked to a proposed equity infusion of ₹39,618 crore through a preferential issue to MUFG Bank Ltd. This transaction, subject to shareholder and regulatory approvals, is expected to be concluded in 2026 and would result in MUFG holding a 20% stake in SFL. ICRA notes that this infusion is expected to significantly improve SFL's capitalization profile, providing a buffer for growth and managing asset quality volatility. It is also anticipated to strengthen the company's credit risk profile, enhance financial flexibility, improve earnings performance, and lower the cost of funding.

ICRA's rationale highlights SFL's leadership in the pre-owned commercial vehicle (CV) financing segment, its established track record, strong customer reach, and a granular retail loan book. As of September 2025, SFL is India's second-largest NBFC by Assets Under Management (AUM) with ₹2,81,309 crore, 74% of which is focused on vehicle financing. The company's standalone net worth was ₹59,214 crore with a managed gearing of 4.0 times and a capital adequacy ratio of 20.7% as of September 30, 2025. The proposed equity infusion is projected to reduce managed gearing to 2.5 times on a pro forma basis.

Financially, SFL reported healthy yields and lending spreads. Its net interest margin (NIM) was 7.3% of average managed assets in H1 FY2026, and credit costs declined to 1.5% in the same period. Return on average managed assets (RoMA) stood at 2.8% for H1 FY2026 on a consolidated basis. The company maintains a diversified funding mix with substantial on-balance sheet liquidity and a strong liquidity coverage ratio.