ABFRL.NS WACC - Weighted Average Cost of Capital

The WACC of Aditya Birla Fashion and Retail Ltd (ABFRL.NS) is 13.5%.

The Cost of Equity of Aditya Birla Fashion and Retail Ltd (ABFRL.NS) is 13.10%.

The Cost of Debt of Aditya Birla Fashion and Retail Ltd (ABFRL.NS) is 18.85%.

	Range	Selected
Cost of equity	11.20% - 15.00%	13.10%
Tax rate	15.90% - 22.20%	19.05%
Cost of debt	10.80% - 26.90%	18.85%
WACC	10.7% - 16.3%	13.5%

WACC

ABFRL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.52	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	15.00%

Tax rate	15.90%	22.20%
Debt/Equity ratio	0.29	0.29
Cost of debt	10.80%	26.90%

After-tax WACC	10.7%	16.3%


Selected WACC	13.5%

ABFRL.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 ABFRL.NS:

cost_of_equity (13.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.52) + 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.