SOLARA.NS WACC - Weighted Average Cost of Capital

The WACC of Solara Active Pharma Sciences Ltd (SOLARA.NS) is 16.3%.

The Cost of Equity of Solara Active Pharma Sciences Ltd (SOLARA.NS) is 18.25%.

The Cost of Debt of Solara Active Pharma Sciences Ltd (SOLARA.NS) is 14.55%.

	Range	Selected
Cost of equity	16.40% - 20.10%	18.25%
Tax rate	9.80% - 24.10%	16.95%
Cost of debt	10.50% - 18.60%	14.55%
WACC	14.3% - 18.4%	16.3%

WACC

SOLARA.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.14	1.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	20.10%

Tax rate	9.80%	24.10%
Debt/Equity ratio	0.42	0.42
Cost of debt	10.50%	18.60%

After-tax WACC	14.3%	18.4%


Selected WACC	16.3%

SOLARA.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 SOLARA.NS:

cost_of_equity (18.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.14) + 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.