Shriram Finance shares soar on CARE Ratings upgrade, check details

Shares of Shriram Finance rose over 2% in Tuesday's session as CARE Ratings upgraded its non-convertible debentures and subordinate debt worth ₹2,500 crore to 'CARE AAA; Stable' from 'CARE AA+; Stable'. The rating agency also reaffirmed the top short term rating of 'CARE A1+' on the company's commercial paper programme aggregating ₹7,500 crore.

The upgrade comes close on the heels of Japan's MUFG announcing a major investment, with a commitment to acquire a 20% stake in Shriram Finance for $4.4 billion, marking MUFG's largest investment in India to date.

Shriram Finance  shares gained 2.20% to Rs 977.70 in the current session. Market cap of the firm stood at Rs 1.83 lakh crore. 

The management has indicated that the rating upgrade is expected to drive a meaningful decline in the company’s cost of funds, currently calculated at 8.7%. According to company officials, Shriram Finance expects its cost of funds to fall by nearly 100 basis points over the next 1.5 to 2 years.

In the broader market context, Shriram Finance’s rating upgrade and equity infusion from MUFG set it apart from its peers in the non-bank finance sector, offering a strong endorsement of its operational and financial performance. The company’s leadership noted that the improved rating and reduced funding costs are expected to enhance its competitiveness.