CHOLAHLDNG.NS WACC - Weighted Average Cost of Capital

The WACC of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 10.1%.

The Cost of Equity of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 31.90%.

The Cost of Debt of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 9.25%.

	Range	Selected
Cost of equity	28.80% - 35.00%	31.90%
Tax rate	26.30% - 26.30%	26.30%
Cost of debt	8.00% - 10.50%	9.25%
WACC	8.9% - 11.2%	10.1%

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	2.64	2.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	28.80%	35.00%

Tax rate	26.30%	26.30%
Debt/Equity ratio	6.75	6.75
Cost of debt	8.00%	10.50%

After-tax WACC	8.9%	11.2%


Selected WACC	10.1%

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 (31.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (2.64) + 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.