SHRIRAMCIT.NS WACC - Weighted Average Cost of Capital

The WACC of Shriram City Union Finance Ltd (SHRIRAMCIT.NS) is 8.2%.

The Cost of Equity of Shriram City Union Finance Ltd (SHRIRAMCIT.NS) is 15.90%.

The Cost of Debt of Shriram City Union Finance Ltd (SHRIRAMCIT.NS) is 5.75%.

	Range	Selected
Cost of equity	12.70% - 19.10%	15.90%
Tax rate	26.90% - 30.10%	28.50%
Cost of debt	4.00% - 7.50%	5.75%
WACC	6.3% - 10.0%	8.2%

WACC

SHRIRAMCIT.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.71	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	19.10%

Tax rate	26.90%	30.10%
Debt/Equity ratio	1.89	1.89
Cost of debt	4.00%	7.50%

After-tax WACC	6.3%	10.0%


Selected WACC	8.2%

SHRIRAMCIT.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 SHRIRAMCIT.NS:

cost_of_equity (15.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.71) + 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.