ALKEM.NS
Alkem Laboratories Ltd
Price:  
5,055.00 
INR
Volume:  
54,493.00
India | Pharmaceuticals
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ALKEM.NS WACC - Weighted Average Cost of Capital

The WACC of Alkem Laboratories Ltd (ALKEM.NS) is 13.4%.

The Cost of Equity of Alkem Laboratories Ltd (ALKEM.NS) is 13.55%.
The Cost of Debt of Alkem Laboratories Ltd (ALKEM.NS) is 5.75%.

Range Selected
Cost of equity 12.50% - 14.60% 13.55%
Tax rate 9.80% - 11.10% 10.45%
Cost of debt 4.00% - 7.50% 5.75%
WACC 12.3% - 14.4% 13.4%
WACC

ALKEM.NS WACC calculation

Category Low High
Long-term bond rate 6.9% 7.4%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.68 0.73
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.50% 14.60%
Tax rate 9.80% 11.10%
Debt/Equity ratio 0.02 0.02
Cost of debt 4.00% 7.50%
After-tax WACC 12.3% 14.4%
Selected WACC 13.4%

ALKEM.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 ALKEM.NS:

cost_of_equity (13.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.68) + 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.