RELAXO.NS WACC - Weighted Average Cost of Capital

The WACC of Relaxo Footwears Ltd (RELAXO.NS) is 13.7%.

The Cost of Equity of Relaxo Footwears Ltd (RELAXO.NS) is 13.90%.

The Cost of Debt of Relaxo Footwears Ltd (RELAXO.NS) is 9.20%.

	Range	Selected
Cost of equity	12.80% - 15.00%	13.90%
Tax rate	25.50% - 25.70%	25.60%
Cost of debt	7.60% - 10.80%	9.20%
WACC	12.6% - 14.8%	13.7%

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	0.72	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.80%	15.00%

Tax rate	25.50%	25.70%
Debt/Equity ratio	0.03	0.03
Cost of debt	7.60%	10.80%

After-tax WACC	12.6%	14.8%


Selected WACC	13.7%

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 (13.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.