AMARAJABAT.NS WACC - Weighted Average Cost of Capital

The WACC of Amara Raja Batteries Ltd (AMARAJABAT.NS) is 17.7%.

The Cost of Equity of Amara Raja Batteries Ltd (AMARAJABAT.NS) is 17.85%.

The Cost of Debt of Amara Raja Batteries Ltd (AMARAJABAT.NS) is 7.45%.

	Range	Selected
Cost of equity	16.40% - 19.30%	17.85%
Tax rate	25.90% - 26.20%	26.05%
Cost of debt	7.00% - 7.90%	7.45%
WACC	16.3% - 19.2%	17.7%

WACC

AMARAJABAT.NS WACC calculation

Category	Low	High

Long-term bond rate	7.2%	7.7%
Equity market risk premium	8.8%	9.8%
Adjusted beta	1.04	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	19.30%

Tax rate	25.90%	26.20%
Debt/Equity ratio	0.01	0.01
Cost of debt	7.00%	7.90%

After-tax WACC	16.3%	19.2%


Selected WACC	17.7%

AMARAJABAT.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 AMARAJABAT.NS:

cost_of_equity (17.85%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (1.04) + 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.