530317.BO WACC - Weighted Average Cost of Capital

The WACC of Godavari Drugs Ltd (530317.BO) is 13.9%.

The Cost of Equity of Godavari Drugs Ltd (530317.BO) is 18.85%.

The Cost of Debt of Godavari Drugs Ltd (530317.BO) is 11.30%.

	Range	Selected
Cost of equity	17.00% - 20.70%	18.85%
Tax rate	22.80% - 24.10%	23.45%
Cost of debt	10.50% - 12.10%	11.30%
WACC	12.7% - 15.1%	13.9%

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	1.22	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.00%	20.70%

Tax rate	22.80%	24.10%
Debt/Equity ratio	0.93	0.93
Cost of debt	10.50%	12.10%

After-tax WACC	12.7%	15.1%


Selected WACC	13.9%

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 (18.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.22) + 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.