DMART.NS WACC - Weighted Average Cost of Capital

The WACC of Avenue Supermarts Ltd (DMART.NS) is 11.1%.

The Cost of Equity of Avenue Supermarts Ltd (DMART.NS) is 11.05%.

The Cost of Debt of Avenue Supermarts Ltd (DMART.NS) is 10.40%.

	Range	Selected
Cost of equity	10.30% - 11.80%	11.05%
Tax rate	26.10% - 26.50%	26.30%
Cost of debt	7.50% - 13.30%	10.40%
WACC	10.3% - 11.8%	11.1%

WACC

DMART.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.42	0.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	11.80%

Tax rate	26.10%	26.50%
Debt/Equity ratio	0	0
Cost of debt	7.50%	13.30%

After-tax WACC	10.3%	11.8%


Selected WACC	11.1%

DMART.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 DMART.NS:

cost_of_equity (11.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.42) + 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.