SHM.AX
Shriro Holdings Ltd
Price:  
0.69 
AUD
Volume:  
27,529.00
Australia | Household Durables
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SHM.AX WACC - Weighted Average Cost of Capital

The WACC of Shriro Holdings Ltd (SHM.AX) is 8.6%.

The Cost of Equity of Shriro Holdings Ltd (SHM.AX) is 9.70%.
The Cost of Debt of Shriro Holdings Ltd (SHM.AX) is 7.00%.

Range Selected
Cost of equity 6.80% - 12.60% 9.70%
Tax rate 29.40% - 31.40% 30.40%
Cost of debt 7.00% - 7.00% 7.00%
WACC 6.4% - 10.9% 8.6%
WACC

SHM.AX WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.54 1.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 12.60%
Tax rate 29.40% 31.40%
Debt/Equity ratio 0.27 0.27
Cost of debt 7.00% 7.00%
After-tax WACC 6.4% 10.9%
Selected WACC 8.6%

SHM.AX'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 SHM.AX:

cost_of_equity (9.70%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.54) + 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.