GIC Private Limited Reduces Shareholding in Shriram Finance Through Open Market Sale

Shriram Finance Limited has received a substantial acquisition disclosure from GIC Private Limited under Regulation 29 of SEBI's takeover regulations, revealing a reduction in the investment manager's shareholding through open market transactions.

Transaction Overview

GIC Private Limited, acting as investment manager on behalf of Government of Singapore and Monetary Authority of Singapore, executed an open market sale of equity shares on 9 April 2026. The transaction involved the disposal of 266,269 equity shares carrying voting rights, representing a 0.011% reduction in the company's shareholding.

Transaction Details: Value Transaction Date: 9 April 2026 Mode of Sale: Open Market Sale Shares Sold: 266,269 equity shares Percentage Reduction: 0.011% Selling Entity: Government of Singapore

Shareholding Changes

The disclosure reveals the detailed breakdown of shareholding changes for both Government of Singapore and Monetary Authority of Singapore. Prior to the transaction, the combined holding stood at 100,863,617 equity shares, representing 4.287% of the total share capital.

Shareholding Comparison: Before Transaction After Transaction Change Government of Singapore: 82,433,496 shares (3.504%) 82,167,227 shares (3.492%) -266,269 shares Monetary Authority of Singapore: 18,430,121 shares (0.783%) 18,430,121 shares (0.783%) No change Total Combined Holding: 100,863,617 shares (4.287%) 100,597,348 shares (4.276%) -266,269 shares

Regulatory Context

The disclosure was made under Regulation 29(2) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. GIC Private Limited operates as an investment manager with power to exercise voting rights for all shares it manages on behalf of Government of Singapore and Monetary Authority of Singapore.

The filing indicates that since GIC's last disclosure on 26 March 2024, when it held 26,704,324 equity shares representing 7.11% of the company, multiple non-reportable transactions have occurred. The current disclosure was triggered when the cumulative effect of these transactions crossed the regulatory threshold requiring formal notification.

Company Share Capital

Shriram Finance Limited's equity share capital remained unchanged at 2,352,686,426 equity shares as per the shareholding pattern disclosed on 8 April 2026. The total diluted share capital, accounting for outstanding convertible securities, stands at 2,353,842,110 equity shares.

The disclosure confirms that GIC Private Limited does not belong to the promoter or promoter group of Shriram Finance Limited, and the company's shares are listed on both National Stock Exchange of India Limited and BSE Limited.

Shriram Finance Limited has received significant credit rating upgrades from three major rating agencies, with ICRA Limited elevating its long-term rating to [ICRA]AAA; Stable, CRISIL Ratings Limited upgrading to 'Crisil AAA/Stable', and India Ratings and Research upgrading to 'IND AAA/Stable'. All agencies have removed their Watch with Positive Implications status following the company's strategic equity infusion from MUFG Bank Ltd. Additionally, both JPMorgan and Morgan Stanley have maintained positive ratings, with JPMorgan setting a target price of ₹1,180 and Morgan Stanley at ₹1,325, citing the AAA upgrades and improving credit profile as key factors.

JPMorgan Analyst Coverage

JPMorgan maintains its Overweight rating on Shriram Finance with a target price of ₹1,180, highlighting the transformative impact of MUFG's capital infusion:

Rating Parameter: Details Rating: Overweight (Maintained) Target Price: ₹1,180 Key Catalyst: MUFG's ₹396bn capital infusion and AAA upgrade Funding Cost Benefit: 80-100bps decline expected PAT CAGR Projection: 25% over FY26-28 AUM Growth Expectation: 18% with RoA expansion

The brokerage emphasizes that the AAA rating upgrade following MUFG's investment will significantly improve competitiveness and enable growth in lower-yield segments. JPMorgan expects substantial funding cost advantages and strong earnings growth trajectory over the forecast period.

Morgan Stanley Analyst Coverage

Morgan Stanley maintains its Overweight rating on Shriram Finance with a target price of ₹1,325, highlighting several key factors:

Rating Parameter: Details Rating: Overweight (Maintained) Target Price: ₹1,325 Key Catalyst: AAA upgrade by ICRA post MUFG deal Investment Thesis: Improving credit profile and narrowing funding cost advantage

The brokerage firm emphasizes that the AAA rating upgrade post the MUFG deal significantly improves the company's credit profile. Morgan Stanley expects the narrowing funding cost advantage to support Return on Assets (ROA) improvement, making Shriram Finance a preferred choice among Non-Banking Financial Companies.

India Ratings and Research Upgrade

India Ratings and Research has upgraded Shriram Finance and its long-term debt instruments to 'IND AAA/Stable' from 'IND AA+/Positive':

Instrument Type: Size (₹ million) Rating Action Issuer Rating: - Upgraded to IND AAA/Stable Non-Convertible Debentures: 3,56,858.85 Upgraded to IND AAA/Stable Bank Loans: 2,28,382.00 Long-term rating upgraded Subordinated Debt: 76,200.00 Upgraded to IND AAA/Stable Fixed Deposits: - Upgraded to IND AAA/Stable Commercial Paper: 75,000.00 IND A1+ (Affirmed)

The upgrade reflects Shriram Finance's significantly strengthened credit profile following the strategic equity investment of ₹39,618 crore by MUFG Bank Ltd, which acquired a 20% stake in the company. India Ratings expects ongoing support from MUFG to further strengthen the company's credit profile on both asset and liability sides.

ICRA Rating Upgrade Details

ICRA Limited has upgraded Shriram Finance's comprehensive rating across multiple instruments:

Instrument: Prior Rating Upgraded Rating Fixed Deposit Programme: [ICRA]AA+; Watch with Positive Implications [ICRA]AAA; Stable Non-Convertible Debenture Programme: [ICRA]AA+; Watch with Positive Implications [ICRA]AAA; Stable

The total rated amount has increased substantially from ₹975 crore to ₹2,975 crore, reflecting the company's expanded funding requirements and improved credit profile.

CRISIL Rating Action

CRISIL Ratings Limited has upgraded multiple facilities and instruments:

Facility/Instrument: Rating Action Bank Loan Facilities - Long-term: Crisil AAA/Stable (Upgraded from 'Crisil AA+') ₹80,000 Crore Fixed Deposits: Crisil AAA/Stable (Upgraded from 'Crisil AA+') Non-Convertible Debentures: Crisil AAA/Stable (Upgraded from 'Crisil AA+') Subordinated Debt: Crisil AAA/Stable (Upgraded from 'Crisil AA+') Commercial Paper: Crisil A1+ (Reaffirmed)

CRISIL has also withdrawn ratings on ₹1,190 crore Non-Convertible Debentures, ₹50 crore Long-Term Principal Protected Market Linked Debentures, and ₹40 crore Subordinated Debt upon redemption.

Strategic Equity Infusion Drives Upgrades

The rating upgrades follow Shriram Finance's board approval for the allotment of 47,11,21,055 fully paid-up equity shares through preferential issue to MUFG Bank Ltd for approximately ₹39,618 crore. This transaction results in MUFG holding a 20% stake in the company while management control remains with the Shriram Group.

All rating agencies noted that this equity infusion has significantly bolstered Shriram Finance's capitalisation profile, providing substantial buffer for growth and managing asset quality volatility. The company's managed gearing is expected to decline to approximately 2.50 times on a pro forma basis. India Ratings highlighted that the increased capital buffers and MUFG's shareholding could improve funding costs, allowing the company to target better profile customers and improve margins.

Financial Performance and Market Position

Shriram Finance maintains its position as India's second largest NBFC by assets under management (AUM), with ₹2,91,709 crore as of December 31, 2025. The company demonstrates strong market leadership in preowned commercial vehicle financing with 74% of its AUM focused on vehicle financing.

Financial Metric (Standalone): 9M FY2026 FY2025 FY2024 Total Income (₹ crore): 35,650.00 41,859.00 34,998.00 Profit After Tax (₹ crore): 6,985.00 9,761.00 7,190.00 Return on Managed Assets: 2.90% 3.50% 3.10% Gross Stage 3 Assets: 4.50% 4.60% 5.50%

The company's asset quality has shown consistent improvement, with gross stage 3 assets declining to 4.50% as of December 2025. Credit costs remained controlled at 1.40% of average managed assets in 9M FY2026. India Ratings noted that the company's collection efficiency increased to 98.90% as of December 2025, while provision coverage on stage 3 assets stood at 45.80%.

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