531359.BO WACC - Weighted Average Cost of Capital

The WACC of Shriram Asset Management Co Ltd (531359.BO) is 11.3%.

The Cost of Equity of Shriram Asset Management Co Ltd (531359.BO) is 11.30%.

The Cost of Debt of Shriram Asset Management Co Ltd (531359.BO) is 39.15%.

	Range	Selected
Cost of equity	9.40% - 13.20%	11.30%
Tax rate	7.20% - 8.60%	7.90%
Cost of debt	7.00% - 71.30%	39.15%
WACC	9.4% - 13.3%	11.3%

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	0.31	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	13.20%

Tax rate	7.20%	8.60%
Debt/Equity ratio	0	0
Cost of debt	7.00%	71.30%

After-tax WACC	9.4%	13.3%


Selected WACC	11.3%

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 (11.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.31) + 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.