SHAHALLOYS.NS WACC - Weighted Average Cost of Capital

The WACC of Shah Alloys Ltd (SHAHALLOYS.NS) is 9.9%.

The Cost of Equity of Shah Alloys Ltd (SHAHALLOYS.NS) is 13.50%.

The Cost of Debt of Shah Alloys Ltd (SHAHALLOYS.NS) is 5.50%.

	Range	Selected
Cost of equity	11.90% - 15.10%	13.50%
Tax rate	24.80% - 26.80%	25.80%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.5% - 11.3%	9.9%

WACC

SHAHALLOYS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.6	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	15.10%

Tax rate	24.80%	26.80%
Debt/Equity ratio	0.62	0.62
Cost of debt	4.00%	7.00%

After-tax WACC	8.5%	11.3%


Selected WACC	9.9%

SHAHALLOYS.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 SHAHALLOYS.NS:

cost_of_equity (13.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.6) + 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.