SFL.NS WACC - Weighted Average Cost of Capital

The WACC of Sheela Foam Ltd (SFL.NS) is 13.5%.

The Cost of Equity of Sheela Foam Ltd (SFL.NS) is 15.35%.

The Cost of Debt of Sheela Foam Ltd (SFL.NS) is 6.10%.

	Range	Selected
Cost of equity	13.30% - 17.40%	15.35%
Tax rate	25.40% - 25.70%	25.55%
Cost of debt	4.30% - 7.90%	6.10%
WACC	11.6% - 15.4%	13.5%

WACC

SFL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.78	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.30%	17.40%

Tax rate	25.40%	25.70%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.30%	7.90%

After-tax WACC	11.6%	15.4%


Selected WACC	13.5%

SFL.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 SFL.NS:

cost_of_equity (15.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.78) + 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.