M&M.NS WACC - Weighted Average Cost of Capital
The WACC of Mahindra and Mahindra Ltd (M&M.NS) is 14.0%.
| Range | Selected | |
| Cost of equity | 15.3% - 18.7% | 17% |
| Tax rate | 22.9% - 24.4% | 23.65% |
| Cost of debt | 4.0% - 7.5% | 5.75% |
| WACC | 12.4% - 15.6% | 14.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.01 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.3% | 18.7% |
| Tax rate | 22.9% | 24.4% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 4.0% | 7.5% |
| After-tax WACC | 12.4% | 15.6% |
| Selected WACC | 14.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| M&M.NS | Mahindra and Mahindra Ltd | 0.3 | 1.77 | 1.44 |
| 000625.SZ | Chongqing Changan Automobile Co Ltd | 0.3 | 1.1 | 0.9 |
| 000800.SZ | FAW Jiefang Group Co Ltd | 0.45 | 0.78 | 0.58 |
| 600166.SS | Beiqi Foton Motor Co Ltd | 0.71 | 1.03 | 0.67 |
| 600418.SS | Anhui Jianghuai Automobile Group Corp Ltd | 0.24 | 0.64 | 0.54 |
| 601238.SS | Guangzhou Automobile Group Co Ltd | 0.71 | 1.1 | 0.71 |
| HEROMOTOCO.NS | Hero MotoCorp Ltd | 0.01 | 1.25 | 1.25 |
| HINDMOTORS.NS | Hindustan Motors Ltd | 0.03 | 1.4 | 1.36 |
| MARUTI.NS | Maruti Suzuki India Ltd | 0 | 0.97 | 0.97 |
| TATAMOTORS.NS | Tata Motors Ltd | 0.41 | 1.4 | 1.06 |
| Low | High | |
| Unlevered beta | 0.82 | 1.01 |
| Relevered beta | 1.01 | 1.24 |
| Adjusted relevered beta | 1.01 | 1.16 |
M&M.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 M&M.NS:
cost_of_equity (17.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.01) + 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.