SMLISUZU.NS WACC - Weighted Average Cost of Capital

The WACC of SML Isuzu Ltd (SMLISUZU.NS) is 16.8%.

The Cost of Equity of SML Isuzu Ltd (SMLISUZU.NS) is 17.45%.

The Cost of Debt of SML Isuzu Ltd (SMLISUZU.NS) is 9.15%.

	Range	Selected
Cost of equity	16.00% - 18.90%	17.45%
Tax rate	1.00% - 6.70%	3.85%
Cost of debt	7.90% - 10.40%	9.15%
WACC	15.4% - 18.2%	16.8%

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	1.1	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.00%	18.90%

Tax rate	1.00%	6.70%
Debt/Equity ratio	0.09	0.09
Cost of debt	7.90%	10.40%

After-tax WACC	15.4%	18.2%


Selected WACC	16.8%

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 (17.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.1) + 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.