RELAXO.NS WACC - Weighted Average Cost of Capital

The WACC of Relaxo Footwears Ltd (RELAXO.NS) is 14.4%.

The Cost of Equity of Relaxo Footwears Ltd (RELAXO.NS) is 14.50%.

The Cost of Debt of Relaxo Footwears Ltd (RELAXO.NS) is 9.30%.

	Range	Selected
Cost of equity	13.20% - 15.80%	14.50%
Tax rate	25.30% - 25.50%	25.40%
Cost of debt	7.80% - 10.80%	9.30%
WACC	13.1% - 15.7%	14.4%

WACC

RELAXO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.76	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	15.80%

Tax rate	25.30%	25.50%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.80%	10.80%

After-tax WACC	13.1%	15.7%


Selected WACC	14.4%

RELAXO.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 RELAXO.NS:

cost_of_equity (14.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.76) + 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.