SMLISUZU.NS WACC - Weighted Average Cost of Capital

The WACC of SML Isuzu Ltd (SMLISUZU.NS) is 16.5%.

The Cost of Equity of SML Isuzu Ltd (SMLISUZU.NS) is 18.05%.

The Cost of Debt of SML Isuzu Ltd (SMLISUZU.NS) is 8.95%.

	Range	Selected
Cost of equity	16.70% - 19.40%	18.05%
Tax rate	1.00% - 6.70%	3.85%
Cost of debt	8.10% - 9.80%	8.95%
WACC	15.3% - 17.8%	16.5%

WACC

SMLISUZU.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.18	1.24

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.70%	19.40%

Tax rate	1.00%	6.70%
Debt/Equity ratio	0.19	0.19
Cost of debt	8.10%	9.80%

After-tax WACC	15.3%	17.8%


Selected WACC	16.5%

SMLISUZU.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 SMLISUZU.NS:

cost_of_equity (18.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.18) + 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.