Shriram Finance share price jumps 5% to record high as MUFG to buy 20% stake: More upside ahead?

Shriram Finance share price: Shares of non-banking finance company (NBFC), Shriram Finance, jumped nearly 5% to hit a fresh record high on Friday, December 19, after the company informed exchanges that Japan's Mitsubishi UFJ Financial Group will pick up a substantial stake in the company.

Shriram Finance share price hit the day's high of ₹911.35 on the BSE following the announcement, up 4.8% over its last closing price of ₹869.20.

MUFG will buy a 20% stake in Shriram Finance for $4.4 billion ( ₹39,618 crore). This not only marks the largest cross-border investment in India's financial sector but also adds to the list of investments by Japanese companies in domestic lenders.

Earlier this year, Mizuho made a majority investment in Avendus, and Sumitomo Mitsui Banking Corp acquired a stake in Yes Bank.

The investment by MUFG will be made through a preferential issuance of equity shares, and is subject to shareholder approval, regulatory clearances and customary closing conditions, according to a statement on Friday.

The fund infusion will significantly enhance Shriram Finance's capital adequacy, strengthen its balance sheet, and provide long-term growth capital, said the company. “This collaboration is further expected to unlock synergies in technology, innovation, and customer engagement, driving sustainable growth. It will 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.

For Shriram Finance, the benefits are significant, said Abhinav Tiwari, Research Analyst at Bonanza.

“The capital infusion will sharply strengthen its balance sheet, taking net worth to about ₹90,000-92,000 crore. This provides strong headroom for loan growth, especially in commercial vehicle and MSME lending, which are its core businesses. We also expect the partnership to lower Shriram Finance’s borrowing costs by 50-60 basis points due to better credit ratings and access to MUFG’s global funding,” Tiwari added.

He further noted that importantly, there is no disruption to management as the existing leadership team remains in place, and the promoter group continues as the largest shareholder. “More broadly, the deal reinforces global confidence in India’s financial sector and is a positive signal for the entire NBFC space, supporting valuations and future capital raising.”

Shriram Finance: Share price outlook

Commenting on the near-term outlook for the stock, Anshul Jain, Head of Research at Lakshmishree, said, “Shriram Finance continues to show strong trend integrity after breaking out of a 57-week flat base near 717. The stock has sustained momentum, forming a fresh swing low around 817 before pushing into another breakout phase. Both the earlier base breakout and the current continuation structure project a common measured target in the 999 to 1010 zone, keeping the upside roadmap clear.”

Rising daily, weekly, and monthly moving averages remain tightly aligned and are acting as dynamic launchpads during each consolidation, while volume behaviour supports participation, and pullbacks stay shallow.

Unless the stock slips back below recent swing supports, the momentum setup remains firmly biased toward higher levels, he opined.

So far this year, Shriram Finance share price has rallied 56% while in a year, it has gained 54%. On a longer time frame, the blue-chip NBFC stock has emerged as a multibagger, rallying 230% in three years and 342% in five years.

As of 1.30 pm, Shriram Finance share price was trading at ₹907.40, up 4.39% on the BSE.

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