SOUTHBANK.NS WACC - Weighted Average Cost of Capital

The WACC of South Indian Bank Ltd (SOUTHBANK.NS) is 12.8%.

The Cost of Equity of South Indian Bank Ltd (SOUTHBANK.NS) is 16.60%.

The Cost of Debt of South Indian Bank Ltd (SOUTHBANK.NS) is 5.00%.

	Range	Selected
Cost of equity	14.90% - 18.30%	16.60%
Tax rate	28.30% - 30.00%	29.15%
Cost of debt	5.00% - 5.00%	5.00%
WACC	11.6% - 13.9%	12.8%

WACC

SOUTHBANK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.97	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.90%	18.30%

Tax rate	28.30%	30.00%
Debt/Equity ratio	0.42	0.42
Cost of debt	5.00%	5.00%

After-tax WACC	11.6%	13.9%


Selected WACC	12.8%

SOUTHBANK.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 SOUTHBANK.NS:

cost_of_equity (16.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.97) + 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.