MUFG- Shriram Finance Deal: Shriram Finance share price has witnessed a relentless climb in recent times, soaring 97% from its 52-week low as investor enthusiasm around the landmark investment by Japan’s MUFG Bank surged.
MUFG Bank would acquire a 20% stake in the company for ₹39,620 crore of the company through a preferential allotment of shares. Under the deal, MUFG will acquire shares at ₹840.93 apiece, representing a discount of around 3% to the stock’s closing price on December 18. It is one of the largest foreign investments ever seen in India’s non-banking finance space.
The NBFC stock fresh record highs for the third straight session on Wednesday, December 24. The stock touched an all-time high of ₹983.7 during the session. However, in intra-day deals today, December 26, the stock declined 1.5% amid overall weak sentiment on Dalal Street.
Despite today’s fall, Shriram Finance’s share price has delivered an exceptional run in recent months. Over the past three months, the stock has surged 59%, while it has zoomed 97% from its 52-week low of ₹493.60, which was recorded on January 20, 2025. In shorter periods, the stock has added 16% in one month and 12% in one week, reflecting sustained buying interest.
Shriram Finance – MUFG deal
Shriram Finance’s board has approved a preferential issue of ₹39,618 crore to MUFG Bank through the issuance of 471 million equity shares at ₹840.93 per share, subject to shareholder and regulatory approvals from bodies such as the RBI and CCI. Post the transaction, MUFG will hold a 20% fully diluted stake, while the promoter and promoter group will own 20.3%, and the public shareholding will stand at 60%.
The transaction is expected to significantly strengthen Shriram Finance’s capital base, enhance balance sheet resilience and provide long-term growth capital. The investment has been described as the largest foreign direct investment (FDI) deal in the banking, financial services and insurance (BFSI) sector.
Should you buy, sell or hold?
Following the record-breaking rally in the NBFC stock, the key question for investors now is whether there is still merit in buying at elevated levels or if much of the upside has already been priced in. Brokerage houses have also turned more optimistic on the company’s prospects, revisiting their assumptions on growth, profitability and balance sheet strength, while technical analysts continue to track whether the momentum can sustain after the sharp run-up.
Following the announcement, nearly every brokerage tracking the stock raised its price target. Nomura maintained its “buy” rating and lifted its target price to ₹1,140. The brokerage said the deal would lead to a 24% accretion in book value per share, a 3.4 basis point dilution in return on equity, while return on assets could expand to 3.7%. Nomura also raised its AUM growth outlook to 20% from 17% earlier, citing an improved growth trajectory.
ICICI Securities also reiterated its BUY rating, factoring in book value accretion and rolling valuations to FY28E. “Factoring in book accretion and rolling to FY28E, analysts maintain valuation multiple at around 2.2x FY28E BV, implying a target price of ₹1,200,” ICICI Securities said.
The brokerage highlighted management commentary on strong business visibility, especially in vehicle finance, and noted that growth guidance has been revised to 20% CAGR over the next 4–5 years, compared with an earlier estimate of 15%. ICICI Securities added that capital adequacy is expected to improve to 31% from 20.7%, potentially supporting a credit rating upgrade and lowering cost of funds by 50–75 basis points over time.
Motilal Oswal Financial Services described MUFG’s entry as a defining moment for the company. “The entry of MUFG as a strategic partner represents a transformative milestone for Shriram Finance, 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,” the brokerage said.
Shriram Finance: Technical View
On the technical front, analysts remain equally constructive. Amruta Shinde, Research Analyst at Choice Broking, said the stock continues to display strong bullish characteristics. “SHRIRAMFIN is currently trading near 974 and maintaining a strong upward trajectory, forming a series of higher highs that indicate sustained bullish momentum. The breakout to a fresh all-time high of 983.7 is supported by consistent volume activity and alignment across key exponential moving averages,” she said, adding that a breakout could open the path towards ₹1,006, while immediate support is seen near ₹845.
With strong price action, improving fundamentals and heightened institutional interest, Shriram Finance remains firmly in the spotlight as investors track how the MUFG partnership reshapes the company’s growth journey in the sessions ahead.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
