DCMSHRIRAM.NS WACC - Weighted Average Cost of Capital

The WACC of DCM Shriram Ltd (DCMSHRIRAM.NS) is 14.1%.

The Cost of Equity of DCM Shriram Ltd (DCMSHRIRAM.NS) is 15.05%.

The Cost of Debt of DCM Shriram Ltd (DCMSHRIRAM.NS) is 7.45%.

	Range	Selected
Cost of equity	13.50% - 16.60%	15.05%
Tax rate	32.90% - 34.30%	33.60%
Cost of debt	7.00% - 7.90%	7.45%
WACC	12.7% - 15.5%	14.1%

WACC

DCMSHRIRAM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.8	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.50%	16.60%

Tax rate	32.90%	34.30%
Debt/Equity ratio	0.1	0.1
Cost of debt	7.00%	7.90%

After-tax WACC	12.7%	15.5%


Selected WACC	14.1%

DCMSHRIRAM.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 DCMSHRIRAM.NS:

cost_of_equity (15.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.8) + 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.