EQUITASBNK.NS WACC - Weighted Average Cost of Capital

The WACC of Equitas Small Finance Bank Ltd (EQUITASBNK.NS) is 13.7%.

The Cost of Equity of Equitas Small Finance Bank Ltd (EQUITASBNK.NS) is 16.50%.

The Cost of Debt of Equitas Small Finance Bank Ltd (EQUITASBNK.NS) is 5.00%.

	Range	Selected
Cost of equity	14.70% - 18.30%	16.50%
Tax rate	14.90% - 24.80%	19.85%
Cost of debt	5.00% - 5.00%	5.00%
WACC	12.3% - 15.0%	13.7%

WACC

EQUITASBNK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.94	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.70%	18.30%

Tax rate	14.90%	24.80%
Debt/Equity ratio	0.29	0.29
Cost of debt	5.00%	5.00%

After-tax WACC	12.3%	15.0%


Selected WACC	13.7%

EQUITASBNK.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 EQUITASBNK.NS:

cost_of_equity (16.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.94) + 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.