SFL.NS WACC - Weighted Average Cost of Capital

The WACC of Sheela Foam Ltd (SFL.NS) is 13.0%.

The Cost of Equity of Sheela Foam Ltd (SFL.NS) is 14.70%.

The Cost of Debt of Sheela Foam Ltd (SFL.NS) is 6.05%.

	Range	Selected
Cost of equity	13.00% - 16.40%	14.70%
Tax rate	25.40% - 25.70%	25.55%
Cost of debt	4.00% - 8.10%	6.05%
WACC	11.4% - 14.7%	13.0%

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	0.74	0.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.00%	16.40%

Tax rate	25.40%	25.70%
Debt/Equity ratio	0.2	0.2
Cost of debt	4.00%	8.10%

After-tax WACC	11.4%	14.7%


Selected WACC	13.0%

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 (14.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.74) + 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.