Fitch upgrades outlook on Shriram Transport from 'negative' to 'stable'

Fitch Ratings has revised the outlook on India-based Shriram Transport Finance Company Ltd's (STFC) long-term foreign- and local-currency Issuer Default Ratings (IDR) from “negative” to “stable”. It affirmed ratings at “BB”.

The rating agency affirmed “BB-” rating for Manappuram Finance's Issuer Default Ratings with “Stable” outlook. It also affirmed the long-term IDR on IIFL Finance at 'B+'. The outlook is stable and Muthoot Finance's IDRs are at 'BB'. The outlook is Stable.

About Shriram, Fitch said the revision in outlook to stable reflects the view that STFC's credit profile is likely to remain resilient, despite lingering uncertainty in the macroeconomic outlook due to the Covid-19 pandemic.

STFC's operating metrics have improved since the second half of the fiscal year ended March 2021 (FY21). It has maintained steady funding access, which is expected to be sustained, Fitch said in a statement.

Shriram has strengthened its capital adequacy, liquidity and provisioning buffers over the past year. This further improves its defences against credit impairment and refinancing risk.

Manappuram's ratings reflect its moderate franchise in niche gold-backed financing, which constitutes 67% of the consolidated portfolio. It underpins typically steady asset quality due to the security of liquid gold collateral, Fitch said.

IIFL Finance's rating is driven by its standalone credit profile and takes into account the company's moderate domestic franchise, diversified loan book and improved loss-absorption buffers. The rating also reflects Fitch's view that persistent impairment risk as the Covid-19 pandemic continues to pressure IIFL Finance's higher-risk loan segments.