MUTHOOTFIN.NS WACC - Weighted Average Cost of Capital

The WACC of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 11.8%.

The Cost of Equity of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 13.90%.

The Cost of Debt of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 12.10%.

	Range	Selected
Cost of equity	12.40% - 15.40%	13.90%
Tax rate	25.50% - 25.50%	25.50%
Cost of debt	8.80% - 15.40%	12.10%
WACC	9.9% - 13.7%	11.8%

WACC

MUTHOOTFIN.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.67	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.40%	15.40%

Tax rate	25.50%	25.50%
Debt/Equity ratio	0.76	0.76
Cost of debt	8.80%	15.40%

After-tax WACC	9.9%	13.7%


Selected WACC	11.8%

MUTHOOTFIN.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 MUTHOOTFIN.NS:

cost_of_equity (13.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.67) + 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.