CHOLAHLDNG.NS
Cholamandalam Financial Holdings Ltd
Price:  
2,080.00 
INR
Volume:  
169,805.00
India | Consumer Finance
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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.