SFL.NS WACC - Weighted Average Cost of Capital

The WACC of Sheela Foam Ltd (SFL.NS) is 12.7%.

The Cost of Equity of Sheela Foam Ltd (SFL.NS) is 14.95%.

The Cost of Debt of Sheela Foam Ltd (SFL.NS) is 6.15%.

	Range	Selected
Cost of equity	13.40% - 16.50%	14.95%
Tax rate	25.40% - 25.70%	25.55%
Cost of debt	4.00% - 8.30%	6.15%
WACC	11.2% - 14.3%	12.7%

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	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.40%	16.50%

Tax rate	25.40%	25.70%
Debt/Equity ratio	0.27	0.27
Cost of debt	4.00%	8.30%

After-tax WACC	11.2%	14.3%


Selected WACC	12.7%

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 (14.95%) = 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.