530317.BO WACC - Weighted Average Cost of Capital

The WACC of Godavari Drugs Ltd (530317.BO) is 14.1%.

The Cost of Equity of Godavari Drugs Ltd (530317.BO) is 18.20%.

The Cost of Debt of Godavari Drugs Ltd (530317.BO) is 11.75%.

	Range	Selected
Cost of equity	16.40% - 20.00%	18.20%
Tax rate	21.90% - 24.10%	23.00%
Cost of debt	10.50% - 13.00%	11.75%
WACC	12.7% - 15.4%	14.1%

WACC

530317.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.14	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	20.00%

Tax rate	21.90%	24.10%
Debt/Equity ratio	0.82	0.82
Cost of debt	10.50%	13.00%

After-tax WACC	12.7%	15.4%


Selected WACC	14.1%

530317.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 530317.BO:

cost_of_equity (18.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.14) + 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.