Shriram Finance share price jumps over 5%, hitting all-time high as analysts gung-ho on stock; Nomura says MUFG’s entry a 'big positive'

The stock is in the spotlight following a major deal with Japan's MUFG Bank that was announced on Friday.

In its press release, the company said its board has approved entering into definitive agreements with MUFG Bank Ltd (“MUFG Bank”) for an investment of ₹39,618 crore (nearly $4.4 billion) in SFL through a preferential issuance of equity shares. This investment will result in MUFG Bank acquiring a 20% stake on a fully diluted basis.

This deal would result in the biggest FDI flow in the financial services space.

The signing of definitive agreements with MUFG Bank reinforces confidence in India's lending and financial services sector fundamentals and future growth potential, it said, adding that it will also strengthen SFL's capital base and accelerate its growth trajectory.

The proposed investment by MUFG Bank is subject to shareholder approval, regulatory clearances and customary closing conditions, it said.

"This collaboration combines SFL's established domestic franchise and extensive distribution network with MUFG Bank's global expertise and financial strength. The fund infusion will significantly enhance SFL's capital adequacy, strengthen its balance sheet, and provide long-term growth capital," it said.

This partnership is further expected to unlock synergies in technology, innovation, and customer engagement, driving sustainable growth, it said.

It will also improve access to low-cost liabilities and potentially strengthen SFL's credit ratings while aligning governance and operational practices with global best standards, it added.

What leading analysts say

Analysts are positive on Shriram Finance post this major deal.

According to news reports, Nomura called MUFG’s entry a “big positive”, forecasting a 24% rise in book value per share despite a 3.4% dip in return on equity, and expects return on assets to reach 3.7%. It has also raised its FY28 AUM growth estimate to 20% from 17%.

Jefferies noted that MUFG’s capital infusion would lift the tier-1 ratio to 30% and improve the likelihood of an AAA credit rating, boosting competitiveness in commercial vehicle and MSME lending. While FY27-28 EPS is expected to decline 6–7% due to dilution, valuations remain reasonable at 1.9× FY27 post-money book value.

CLSA maintained a bullish view, highlighting that lower funding costs and stronger balance sheets could support long-term profitability. It expects mid-teen ROE despite lower leverage and has raised FY27-28 net profit estimates by 12–25%.