531359.BO WACC - Weighted Average Cost of Capital

The WACC of Shriram Asset Management Co Ltd (531359.BO) is 11.8%.

The Cost of Equity of Shriram Asset Management Co Ltd (531359.BO) is 11.75%.

The Cost of Debt of Shriram Asset Management Co Ltd (531359.BO) is 40.80%.

	Range	Selected
Cost of equity	10.40% - 13.10%	11.75%
Tax rate	4.20% - 7.90%	6.05%
Cost of debt	7.00% - 74.60%	40.80%
WACC	10.4% - 13.1%	11.8%

WACC

531359.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.43	0.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	13.10%

Tax rate	4.20%	7.90%
Debt/Equity ratio	0	0
Cost of debt	7.00%	74.60%

After-tax WACC	10.4%	13.1%


Selected WACC	11.8%

531359.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 531359.BO:

cost_of_equity (11.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.43) + 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.