INDOSTAR.NS WACC - Weighted Average Cost of Capital

The WACC of IndoStar Capital Finance Ltd (INDOSTAR.NS) is 12.8%.

The Cost of Equity of IndoStar Capital Finance Ltd (INDOSTAR.NS) is 15.35%.

The Cost of Debt of IndoStar Capital Finance Ltd (INDOSTAR.NS) is 12.95%.

	Range	Selected
Cost of equity	14.10% - 16.60%	15.35%
Tax rate	8.70% - 13.50%	11.10%
Cost of debt	10.50% - 15.40%	12.95%
WACC	11.1% - 14.4%	12.8%

WACC

INDOSTAR.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.87	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.10%	16.60%

Tax rate	8.70%	13.50%
Debt/Equity ratio	1.97	1.97
Cost of debt	10.50%	15.40%

After-tax WACC	11.1%	14.4%


Selected WACC	12.8%

INDOSTAR.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 INDOSTAR.NS:

cost_of_equity (15.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.87) + 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.