STFC's ratings reflect the company's longstanding franchise in used commercial-vehicle financing, experienced management, satisfactory execution record backed by established underwriting processes and risk controls, and improved loss-absorption buffers.
According to the rationale report, Fitch ratings said, "We have revised the Outlook to Stable as we believe 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 fiscal year ended March 2021 (FY21) and it has maintained steady funding access, which we expect will be sustained.
The company has strengthened its capital adequacy, liquidity and provisioning buffers over the past year, further improving its defences against credit impairment and refinancing risk."
The ratings on STFC's medium-term note (MTN) programme and foreign-currency senior secured debt are at the same level as its Long-Term Foreign-Currency IDR, while the rupee-denominated senior secured debt is rated at same level as its Long-Term Local-Currency IDR in accordance with Fitch's rating criteria.
Indian non-bank financial institution (NBFI) borrowings are typically secured and Fitch believes that non-payment of senior secured debt would best reflect an entity's uncured failure. NBFIs can issue unsecured debt in the overseas market, but such debt is likely to constitute a small portion of their funding and thus cannot be viewed as a primary financial obligation.
At around 11:54 AM, Shriram Transport was trading higher by 0.74% at Rs1,377 per piece on Sensex.