FSL.NS WACC - Weighted Average Cost of Capital

The WACC of Firstsource Solutions Ltd (FSL.NS) is 14.2%.

The Cost of Equity of Firstsource Solutions Ltd (FSL.NS) is 14.70%.

The Cost of Debt of Firstsource Solutions Ltd (FSL.NS) is 6.50%.

	Range	Selected
Cost of equity	12.30% - 17.10%	14.70%
Tax rate	16.40% - 16.70%	16.55%
Cost of debt	5.10% - 7.90%	6.50%
WACC	11.8% - 16.5%	14.2%

WACC

FSL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.65	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.30%	17.10%

Tax rate	16.40%	16.70%
Debt/Equity ratio	0.06	0.06
Cost of debt	5.10%	7.90%

After-tax WACC	11.8%	16.5%


Selected WACC	14.2%

FSL.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 FSL.NS:

cost_of_equity (14.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.65) + 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.