Fitch Ratings has placed India-based Shriram Finance's (SFL) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'BB+' and Short-Term IDR of 'B' on Rating Watch Positive (RWP). The company's medium-term note programme and debt ratings have also been placed on RWP.
The RWP follows an agreement under which MUFG Bank (A/Stable), a subsidiary of Mitsubishi UFJ Financial Group, Inc. (MUFG, A-/Stable), will acquire a 20% stake in SFL. Fitch believes SFL's rating could benefit from a one-notch uplift to its Standalone Credit Profile (SCP), reflecting the strategic investment from a stronger long-term shareholder, in line with Fitch's criteria.
Fitch expects to resolve the RWP once the transaction is completed, which SFL expects to occur in 2026, subject to regulatory approvals and other closing conditions. The rating could stay at its present level or be upgraded upon the resolution of the RWP.