Shriram Finance Limited has informed the Exchange about Credit Rating- Revision Upgrade in Long-Term Company's Issuer Default Ratings
SHRIRAMFIN · price
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Fitch Ratings has upgraded Shriram Finance's Long-Term Foreign and Local Currency Issuer Default Ratings from 'BB/Stable' to 'BB+/Stable' on May 13, 2025. The upgrade reflects sustained improvement in the company's standalone credit profile since its 2022 merger with Shriram City Union Finance, including better funding diversity, stronger risk management, improved portfolio quality (NPL ratio fell to 4.6% in FY25 from 5.2% in FY24), and higher profitability (net interest margin rose to 8.5% in FY25 from 6.9% in FY22). Fitch also cited steady leverage at 4.6x debt-to-equity, a more diversified funding mix (deposits at 24% of funding, up from 15% in FY21), and a moderate liquidity buffer. The 'Stable' outlook indicates Fitch sees the improved metrics as sustainable over the medium term.
A rating upgrade from BB to BB+ signals stronger creditworthiness to investors and lenders, which can lower Shriram Finance's future borrowing costs and broaden its access to domestic and offshore funding. For shareholders, this is a positive development that reflects operational improvement, though the stock is a non-banking finance company and remains sensitive to asset quality trends.