ASHOKLEY.NS WACC - Weighted Average Cost of Capital

The WACC of Ashok Leyland Ltd (ASHOKLEY.NS) is 13.6%.

The Cost of Equity of Ashok Leyland Ltd (ASHOKLEY.NS) is 17.15%.

The Cost of Debt of Ashok Leyland Ltd (ASHOKLEY.NS) is 5.75%.

	Range	Selected
Cost of equity	14.40% - 19.90%	17.15%
Tax rate	36.40% - 38.70%	37.55%
Cost of debt	4.00% - 7.50%	5.75%
WACC	11.3% - 16.0%	13.6%

WACC

ASHOKLEY.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.9	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.40%	19.90%

Tax rate	36.40%	38.70%
Debt/Equity ratio	0.35	0.35
Cost of debt	4.00%	7.50%

After-tax WACC	11.3%	16.0%


Selected WACC	13.6%

ASHOKLEY.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 ASHOKLEY.NS:

cost_of_equity (17.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.9) + 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.