CHOLAHLDNG.NS WACC - Weighted Average Cost of Capital

The WACC of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 10.3%.

The Cost of Equity of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 19.55%.

The Cost of Debt of Cholamandalam Financial Holdings Ltd (CHOLAHLDNG.NS) is 10.35%.

	Range	Selected
Cost of equity	17.50% - 21.60%	19.55%
Tax rate	26.30% - 26.30%	26.30%
Cost of debt	10.20% - 10.50%	10.35%
WACC	9.8% - 10.9%	10.3%

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	1.28	1.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.50%	21.60%

Tax rate	26.30%	26.30%
Debt/Equity ratio	3.41	3.41
Cost of debt	10.20%	10.50%

After-tax WACC	9.8%	10.9%


Selected WACC	10.3%

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 (19.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.28) + 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.