CHOLAHLDNG.NS WACC - Weighted Average Cost of Capital

The WACC of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 9.7%.

The Cost of Equity of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 21.70%.

The Cost of Debt of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 9.20%.

	Range	Selected
Cost of equity	18.50% - 24.90%	21.70%
Tax rate	26.30% - 26.30%	26.30%
Cost of debt	7.90% - 10.50%	9.20%
WACC	8.3% - 11.0%	9.7%

WACC

CHOLAHLDNG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.4	1.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.50%	24.90%

Tax rate	26.30%	26.30%
Debt/Equity ratio	4.17	4.17
Cost of debt	7.90%	10.50%

After-tax WACC	8.3%	11.0%


Selected WACC	9.7%

CHOLAHLDNG.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 CHOLAHLDNG.NS:

cost_of_equity (21.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.4) + 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.