CRISIL upgrades Shriram Finance

CRISIL has upgraded the long-term debt ratings of Shriram Finance and Samman Capital. Following completion of the MUFG deal, Shriram Finance’s rating has been upgraded to AAA from AA+. Citing continued strong capitalization and strong buffers, as well as the strategic importance and strong support of IHC Group, Samman Capital has been upgraded to AA+.

For Shriram Finance, the upgrade was largely expected, with management indicating that non-convertible debenture rates could fall by 30-40 basis points and the total cost of funds could fall by 100 basis points in two years. The cost of funds for the company is currently about 140 basis points higher than AAA-rated peers, indicating scope for reduction.

The company recorded a return on assets of 3.1 per cent for the nine months of FY26, in line with expectations. Although there is scope for improvement in margins and return ratios over the two-year period, this will depend on the extent to which benefits are passed on to customers and any shift towards lower risk, lower yielding sectors to drive loan growth.

Rating activities highlight the improved credit profile, although funding costs and margin fluctuations will be key factors to watch.

Samman Capital was upgraded to AA+/Stable, citing continued strong capitalization and strong buffers, as well as the strategic importance and strong support of IHC Group. The upgrade follows IHC’s acquisition of a controlling stake through Avenir Investments RSC Ltd, making it the promoter.

The company said this is its first domestic rating upgrade in nearly a decade, reflecting its improved capital position and financial profile.

“We are pleased to note that this is the first rating upgrade by a domestic rating agency in nearly a decade. This upgrade inter alia reflects the positive impact of IHC’s strategic investments and the strength of the company’s capital position and overall financial profile. This rating action marks the beginning of an upward rating trajectory for the company,” the company said in an exchange filing.

Shares of Samman Capital closed 1.2 per cent higher at ₹156.05 per share. Shares of Shriram Finance closed 3 per cent higher at ₹1,027.15 per share.