SMSPHARMA.NS
SMS Pharmaceuticals Ltd
Price:  
236.25 
INR
Volume:  
41,353.00
India | Pharmaceuticals
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SMSPHARMA.NS WACC - Weighted Average Cost of Capital

The WACC of SMS Pharmaceuticals Ltd (SMSPHARMA.NS) is 13.4%.

The Cost of Equity of SMS Pharmaceuticals Ltd (SMSPHARMA.NS) is 14.35%.
The Cost of Debt of SMS Pharmaceuticals Ltd (SMSPHARMA.NS) is 7.95%.

Range Selected
Cost of equity 12.80% - 15.90% 14.35%
Tax rate 26.40% - 27.20% 26.80%
Cost of debt 7.90% - 8.00% 7.95%
WACC 12.0% - 14.7% 13.4%
WACC

SMSPHARMA.NS WACC calculation

Category Low High
Long-term bond rate 6.9% 7.4%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.72 0.86
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.80% 15.90%
Tax rate 26.40% 27.20%
Debt/Equity ratio 0.13 0.13
Cost of debt 7.90% 8.00%
After-tax WACC 12.0% 14.7%
Selected WACC 13.4%

SMSPHARMA.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 SMSPHARMA.NS:

cost_of_equity (14.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.