Shriram Finance Limited announced that Moody's Investors Service has affirmed the company's Ba1 long-term corporate family rating (CFR). Concurrently, Moody's has changed the outlook for Shriram Finance to positive from stable. This rating action was taken on January 9, 2026.

The positive outlook reflects Moody's expectation that Shriram Finance's business and financial profile will strengthen. This strengthening is anticipated to be supported by a strong strategic shareholder and a significant capital increase resulting from a planned 20% stake acquisition by MUFG Bank, Ltd. through a preferential allotment of shares for INR 396 billion (approximately $4.4 billion). This transaction is subject to regulatory approvals and is expected to close in 2026.

Moody's anticipates that the capital infusion will materially strengthen Shriram Finance's tangible common equity to tangible managed assets (TCE/TMA) ratio to above 29% from around 19% as of March 2025. The agency also expects the company's profitability to gradually improve as its cost of funds declines, supported by lower funding costs and improved access to funding channels. Shriram Finance expects its funding costs to decline by approximately 100 basis points over the next two years. The company's 12-month debt maturity coverage ratio is also expected to rise significantly post-capital infusion.

Moody's expects Shriram Finance's asset quality to remain stable over the next 12-18 months, supported by robust lending and collection processes, a stable macroeconomic environment, and a high proportion of collateralized loans. The agency clarified that it does not incorporate affiliate support from MUFG Bank in Shriram Finance's rating at this time, but will reassess this if there is greater evidence of documented support arrangements.