AARTIDRUGS.NS WACC - Weighted Average Cost of Capital

The WACC of Aarti Drugs Ltd (AARTIDRUGS.NS) is 15.7%.

The Cost of Equity of Aarti Drugs Ltd (AARTIDRUGS.NS) is 17.65%.

The Cost of Debt of Aarti Drugs Ltd (AARTIDRUGS.NS) is 7.25%.

	Range	Selected
Cost of equity	16.40% - 18.90%	17.65%
Tax rate	24.00% - 24.80%	24.40%
Cost of debt	6.60% - 7.90%	7.25%
WACC	14.6% - 16.8%	15.7%

WACC

AARTIDRUGS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.15	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	18.90%

Tax rate	24.00%	24.80%
Debt/Equity ratio	0.19	0.19
Cost of debt	6.60%	7.90%

After-tax WACC	14.6%	16.8%


Selected WACC	15.7%

AARTIDRUGS.NS'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 AARTIDRUGS.NS:

cost_of_equity (17.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.15) + 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.