India Ratings & Research has upgraded Shriram Transport Finance Company (STFC) long-term issuer rating to 'AA+' from 'AA'.

The outlook is stable. Also, the agency has assigned STFC's proposed Rs 30 billion retail non-convertible debentures (NCDs, to be issued in FY15) an 'AA+' rating.

The rating upgrade is driven by the on-going de-risking in STFC's asset and liability profile as it shifts its loan portfolio to newer vehicles and increases retail funding. This, in Ind-Ra's opinion, will strengthen the company's asset quality through a reduction in through-the-cycle credit costs and thus earnings volatility.

Shares of the company declined Rs 74.15, or 7.9%, to settle at Rs 864. The total volume of shares traded was 21,727 at the BSE (Friday).