523369.BO WACC - Weighted Average Cost of Capital

The WACC of Dcm Shriram Industries Ltd (523369.BO) is 11.4%.

The Cost of Equity of Dcm Shriram Industries Ltd (523369.BO) is 13.95%.

The Cost of Debt of Dcm Shriram Industries Ltd (523369.BO) is 9.80%.

	Range	Selected
Cost of equity	12.40% - 15.50%	13.95%
Tax rate	17.80% - 19.40%	18.60%
Cost of debt	6.10% - 13.50%	9.80%
WACC	9.3% - 13.5%	11.4%

WACC

523369.BO WACC calculation

Category	Low	High

Long-term bond rate	7.5%	8.0%
Equity market risk premium	6.9%	7.9%
Adjusted beta	0.7	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.40%	15.50%

Tax rate	17.80%	19.40%
Debt/Equity ratio	0.72	0.72
Cost of debt	6.10%	13.50%

After-tax WACC	9.3%	13.5%


Selected WACC	11.4%

523369.BO's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 523369.BO:

cost_of_equity (13.95%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.7) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.