SHK.NS WACC - Weighted Average Cost of Capital

The WACC of S H Kelkar And Company Ltd (SHK.NS) is 13.7%.

The Cost of Equity of S H Kelkar And Company Ltd (SHK.NS) is 17.30%.

The Cost of Debt of S H Kelkar And Company Ltd (SHK.NS) is 9.85%.

	Range	Selected
Cost of equity	15.70% - 18.90%	17.30%
Tax rate	29.70% - 33.70%	31.70%
Cost of debt	4.30% - 15.40%	9.85%
WACC	11.5% - 16.0%	13.7%

WACC

SHK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.06	1.18

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.70%	18.90%

Tax rate	29.70%	33.70%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.30%	15.40%

After-tax WACC	11.5%	16.0%


Selected WACC	13.7%

SHK.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 SHK.NS:

cost_of_equity (17.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.06) + 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.