MUTHOOTFIN.NS WACC - Weighted Average Cost of Capital

The WACC of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 12.1%.

The Cost of Equity of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 13.80%.

The Cost of Debt of Muthoot Finance Ltd (MUTHOOTFIN.NS) is 12.85%.

	Range	Selected
Cost of equity	12.30% - 15.30%	13.80%
Tax rate	25.50% - 25.50%	25.50%
Cost of debt	10.30% - 15.40%	12.85%
WACC	10.5% - 13.8%	12.1%

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	0.65	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.30%	15.30%

Tax rate	25.50%	25.50%
Debt/Equity ratio	0.65	0.65
Cost of debt	10.30%	15.40%

After-tax WACC	10.5%	13.8%


Selected WACC	12.1%

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 (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.65) + 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.