In line with expectation, CARE Ratings upgraded Shriram Finance’s long-term rating from AA+ to AAA with a stable outlook on Dec 29, 2025, barely a week after the MUFG deal announcement. The brokerage believes this upgrade is likely to be followed by similar actions from other CRAs in the coming quarters, which should ease cost of fund.
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Motilal Oswal Report
Motilal Oswal has reaffirmed its Buy rating on Shriram Finance Ltd. with a revised target price of Rs 1,180, implying a 20% upside from the current market price of Rs 979. The brokerage expects the company to deliver a PAT CAGR of ~26% over FY25–28E, supported by robust growth drivers and structural improvements in funding costs.
The entry of MUFG as a strategic partner represents a transformative milestone for Shriram Finance Ltd., materially strengthening its capital base and enhancing its credit credibility.
This strategic partnership not only de-risks the company’s growth trajectory but also expands its ability to serve a broader customer base across the CV, MSME, and retail segments, while reinforcing long-term franchise positioning.
Shriram Finance has navigated recent asset-quality pressures better than most vehicle financiers, delivering stronger performance than peers. Net interest margins are expanding as excess liquidity normalizes, and growth is set to accelerate, supported by GST rate cuts, a favorable monsoon, and easing inflation.
Despite strong stock performance (~33% in the past two months and ~67% since Jan’25, when the brokerage identified Shriram Finance as a top CY25 idea), it sees a further upside as the company enters a phase of stronger execution and profitability.
Valuations have re-rated from ~1.5x to ~2.9x FY26E price/book value, with room for additional expansion if growth and asset quality trends hold.
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