Shriram Finance stock jumps over 5% after report of stake sale to Mitsubishi UFJ; company clarifies on speculation

Shriram Finance

Shriram Finance shares rose 5.2% percent on Wednesday to end at Rs 647.9, after a news report said Japan’s Mitsubishi UFJ Financial Group (MUFG) is in advanced talks to acquire a 20 percent stake in the company. The proposed investment, estimated at Rs 23,200 crore ($2.61 billion), would be via a preferential allotment and not through a secondary sale of shares, according to news report, which cited unidentified sources. Shriram Finance said that it is unaware of any such stake acquisition or sale proposal.

The report said MUFG and Shriram Finance have signed an exclusivity agreement on negotiations. It added that the Japanese lender -- which is the country’s largest by assets and already holds a 23.62 percent stake in Morgan Stanley -- could consider taking a higher stake in Shriram Finance, or even a controlling interest, over time. The development follows moves by other Japanese financial groups, including Sumitomo Mitsui Financial Group’s 24.2 percent holding in Yes Bank.

In response, Shriram Finance filed a clarification to the stock exchanges. The company said it had received a query from mainstream media about a potential majority stake sale, which it categorically denied. “We hereby in good faith wish to clarify that the Company is not aware of any such potential majority stake sale of equity shares of the Company by any shareholder(s) and no such shareholder(s) has approached the Company or expressed his/their intention to sell,” it said. The statement added that investors should disregard any misleading information circulated in the media.

Brokerage CLSA shared an “Overweight” call on Shriram Finance with a target price of Rs 785 per share, noting the company’s Q1FY26 asset quality was better than feared despite weak macro sentiment. It expects a 15 percent EPS CAGR for FY25-27 and a return on equity of 16.5 percent by FY27.

For the quarter ended June 30, Shriram Finance reported an 8.8 percent year-on-year rise in standalone profit to Rs 2,156 crore, slightly below analyst estimates of Rs 2,191 crore, according to LSEG data.

At the current market price, the stock is down nearly 9.3 percent over the past year, compared with a 52-week range of Rs 493.35 to Rs 725.56. The company has a market capitalisation of about Rs 1.22 trillion, a price-to-earnings ratio of 12.7, and a dividend yield of 1.53 percent.