OAL.NS WACC - Weighted Average Cost of Capital

The WACC of Oriental Aromatics Ltd (OAL.NS) is 15.6%.

The Cost of Equity of Oriental Aromatics Ltd (OAL.NS) is 18.25%.

The Cost of Debt of Oriental Aromatics Ltd (OAL.NS) is 8.55%.

	Range	Selected
Cost of equity	16.10% - 20.40%	18.25%
Tax rate	28.10% - 28.80%	28.45%
Cost of debt	8.00% - 9.10%	8.55%
WACC	13.8% - 17.3%	15.6%

WACC

OAL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.11	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.10%	20.40%

Tax rate	28.10%	28.80%
Debt/Equity ratio	0.28	0.28
Cost of debt	8.00%	9.10%

After-tax WACC	13.8%	17.3%


Selected WACC	15.6%

OAL.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 OAL.NS:

cost_of_equity (18.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.11) + 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.