CENTRUM.NS WACC - Weighted Average Cost of Capital

The WACC of Centrum Capital Ltd (CENTRUM.NS) is 12.5%.

The Cost of Equity of Centrum Capital Ltd (CENTRUM.NS) is 35.55%.

The Cost of Debt of Centrum Capital Ltd (CENTRUM.NS) is 7.05%.

	Range	Selected
Cost of equity	30.50% - 40.60%	35.55%
Tax rate	13.90% - 25.00%	19.45%
Cost of debt	6.20% - 7.90%	7.05%
WACC	11.1% - 13.9%	12.5%

WACC

CENTRUM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	2.85	3.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	30.50%	40.60%

Tax rate	13.90%	25.00%
Debt/Equity ratio	3.38	3.38
Cost of debt	6.20%	7.90%

After-tax WACC	11.1%	13.9%


Selected WACC	12.5%

CENTRUM.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 CENTRUM.NS:

cost_of_equity (35.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (2.85) + 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.