DMART.NS WACC - Weighted Average Cost of Capital

The WACC of Avenue Supermarts Ltd (DMART.NS) is 11.8%.

The Cost of Equity of Avenue Supermarts Ltd (DMART.NS) is 11.85%.

The Cost of Debt of Avenue Supermarts Ltd (DMART.NS) is 11.35%.

	Range	Selected
Cost of equity	10.60% - 13.10%	11.85%
Tax rate	26.60% - 26.90%	26.75%
Cost of debt	7.50% - 15.20%	11.35%
WACC	10.6% - 13.1%	11.8%

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	0.45	0.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	13.10%

Tax rate	26.60%	26.90%
Debt/Equity ratio	0	0
Cost of debt	7.50%	15.20%

After-tax WACC	10.6%	13.1%


Selected WACC	11.8%

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 (11.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.45) + 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.