Shriram Finance shares reached a historic milestone, crossing the ₹1,000 mark for the first time and hitting a record high of ₹1,009. The stock gained 1.30% during the session, extending its winning streak to three consecutive sessions with a cumulative rise of nearly 6% over this period. The remarkable performance saw the stock surge 72% in the previous year, making it one of the standout performers in the financial sector.

MUFG Investment Drives Market Confidence

The primary catalyst behind Shriram Finance's exceptional performance has been Japan-based MUFG's agreement to acquire a 20% stake in the company for $4.4 billion. This transaction represents MUFG's largest investment in India, significantly surpassing its previous cumulative investments of $1.7 billion in the country. The deal marks a major vote of confidence from one of Japan's leading financial institutions in India's lending sector.

CARE Ratings Upgrades Credit Rating to AAA

CARE Ratings has upgraded Shriram Finance's credit rating on non-convertible debentures and subordinate debt to "CARE AAA; Stable" from "CARE AA+; Stable." The rating agency has also assigned a new "CARE AAA; Stable" rating to the company's Fixed Deposit Programme and reaffirmed the highest short-term rating of "CARE A1+" on the commercial paper programme.

Strong Financial Performance and Capital Position

The rating upgrade reflects Shriram Finance's sustained leadership position in the used commercial vehicle financing segment and successful diversification across products and geographies. The company's assets under management grew to ₹2,81,309 crore as of September 30, compared to ₹2,63,190 crore as of March 31. The merger with Shriram City Union Finance has provided synergies in the form of adequate yield-on-advances, reduction in cost of funds, and improvement in asset quality.

Analyst Upgrades and Price Targets

Leading brokerages have responded positively to recent developments, raising their target prices and maintaining bullish ratings. Nomura has increased its target price to ₹1,140, implying an upside of 14.40% from current levels. Citi has maintained its Buy rating while raising the target price to ₹1,100 from ₹870, backed by earnings upgrades of over 10%.

Shriram Finance Limited has received a significant penalty order from tax authorities related to GST violations dating back to FY 2018-19. The company disclosed this development through a regulatory filing under SEBI's listing regulations on December 31, 2025.

Penalty Details and Authority

The Commercial Tax Officer, Chennai South, Tamil Nadu issued the penalty order dated December 30, 2025, imposing a penalty of ₹13,03,53,551.00 for FY 2018-19. The penalty has been levied under Section 74 of the Central Goods and Service Tax Act, 2017, read with the Tamil Nadu Goods and Service Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017.

Nature of Violations

The penalty order addresses multiple GST-related violations that occurred during FY 2018-19. These violations pertain to the erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance Limited effective April 1, 2022.

The specific violations identified include:

• Disallowance of input tax credit taken on payment of Reverse Charge Mechanism (RCM)
• Excess input tax credit claimed in GSTR-3B returns
• Issues related to credit notes issued
• GST implications on leasehold improvements

Total Financial Impact

The complete financial demand from the tax authorities extends beyond just the penalty amount. The total demand structure includes multiple components that significantly increase the overall liability.

Company's Response and Impact Assessment

Shriram Finance has indicated that there is no material impact on the company's financial, operational, or other activities from this penalty order. However, given the quantum of the amount involved, the company is exercising commercial prudence in its response approach.

The company is awaiting an opinion from its tax consultant regarding the Tamil Nadu state demand order reference number ZD331225453972B dated December 30, 2025. This suggests that the company may be considering legal or procedural options to address the penalty order.

Regulatory Compliance and Disclosure

The disclosure was made pursuant to Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The company received the order on December 30, 2025, and the copy was forwarded to the concerned officer on December 31, 2025, prompting the immediate regulatory disclosure.

This development highlights the ongoing scrutiny of GST compliance by tax authorities and the potential financial implications for companies, even for violations dating back several years. The case also demonstrates how corporate restructuring activities, such as amalgamations, can bring forward historical tax liabilities to the surviving entity.