HINDMOTORS.NS WACC - Weighted Average Cost of Capital

The WACC of Hindustan Motors Ltd (HINDMOTORS.NS) is 13.7%.

The Cost of Equity of Hindustan Motors Ltd (HINDMOTORS.NS) is 13.95%.

The Cost of Debt of Hindustan Motors Ltd (HINDMOTORS.NS) is 5.75%.

	Range	Selected
Cost of equity	10.80% - 17.10%	13.95%
Tax rate	5.20% - 21.20%	13.20%
Cost of debt	4.00% - 7.50%	5.75%
WACC	10.6% - 16.8%	13.7%

WACC

HINDMOTORS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.47	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	17.10%

Tax rate	5.20%	21.20%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	7.50%

After-tax WACC	10.6%	16.8%


Selected WACC	13.7%

HINDMOTORS.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 HINDMOTORS.NS:

cost_of_equity (13.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.47) + 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.