AUROPHARMA.NS WACC - Weighted Average Cost of Capital

The WACC of Aurobindo Pharma Ltd (AUROPHARMA.NS) is 12.0%.

The Cost of Equity of Aurobindo Pharma Ltd (AUROPHARMA.NS) is 12.85%.

The Cost of Debt of Aurobindo Pharma Ltd (AUROPHARMA.NS) is 5.75%.

	Range	Selected
Cost of equity	11.50% - 14.20%	12.85%
Tax rate	26.90% - 27.50%	27.20%
Cost of debt	4.00% - 7.50%	5.75%
WACC	10.7% - 13.3%	12.0%

WACC

AUROPHARMA.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.56	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	14.20%

Tax rate	26.90%	27.50%
Debt/Equity ratio	0.11	0.11
Cost of debt	4.00%	7.50%

After-tax WACC	10.7%	13.3%


Selected WACC	12.0%

AUROPHARMA.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 AUROPHARMA.NS:

cost_of_equity (12.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.56) + 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.