LUMAXIND.NS WACC - Weighted Average Cost of Capital

The WACC of Lumax Industries Ltd (LUMAXIND.NS) is 15.3%.

The Cost of Equity of Lumax Industries Ltd (LUMAXIND.NS) is 18.45%.

The Cost of Debt of Lumax Industries Ltd (LUMAXIND.NS) is 8.15%.

	Range	Selected
Cost of equity	16.90% - 20.00%	18.45%
Tax rate	27.30% - 30.50%	28.90%
Cost of debt	7.20% - 9.10%	8.15%
WACC	14.0% - 16.6%	15.3%

WACC

LUMAXIND.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.21	1.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.90%	20.00%

Tax rate	27.30%	30.50%
Debt/Equity ratio	0.33	0.33
Cost of debt	7.20%	9.10%

After-tax WACC	14.0%	16.6%


Selected WACC	15.3%

LUMAXIND.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 LUMAXIND.NS:

cost_of_equity (18.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.21) + 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.