MOTHERSUMI.NS WACC - Weighted Average Cost of Capital

The WACC of Motherson Sumi Systems Ltd (MOTHERSUMI.NS) is 14.7%.

The Cost of Equity of Motherson Sumi Systems Ltd (MOTHERSUMI.NS) is 16.95%.

The Cost of Debt of Motherson Sumi Systems Ltd (MOTHERSUMI.NS) is 8.30%.

	Range	Selected
Cost of equity	15.30% - 18.60%	16.95%
Tax rate	33.00% - 37.60%	35.30%
Cost of debt	4.20% - 12.40%	8.30%
WACC	12.9% - 16.5%	14.7%

WACC

MOTHERSUMI.NS WACC calculation

Category	Low	High

Long-term bond rate	7.5%	8.0%
Equity market risk premium	6.9%	7.9%
Adjusted beta	1.13	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.30%	18.60%

Tax rate	33.00%	37.60%
Debt/Equity ratio	0.24	0.24
Cost of debt	4.20%	12.40%

After-tax WACC	12.9%	16.5%


Selected WACC	14.7%

MOTHERSUMI.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 MOTHERSUMI.NS:

cost_of_equity (16.95%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (1.13) + 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.