SPAL.NS WACC - Weighted Average Cost of Capital

The WACC of S. P. Apparels Ltd (SPAL.NS) is 14.4%.

The Cost of Equity of S. P. Apparels Ltd (SPAL.NS) is 16.10%.

The Cost of Debt of S. P. Apparels Ltd (SPAL.NS) is 8.75%.

	Range	Selected
Cost of equity	14.90% - 17.30%	16.10%
Tax rate	24.80% - 25.80%	25.30%
Cost of debt	8.10% - 9.40%	8.75%
WACC	13.4% - 15.5%	14.4%

WACC

SPAL.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	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.90%	17.30%

Tax rate	24.80%	25.80%
Debt/Equity ratio	0.21	0.21
Cost of debt	8.10%	9.40%

After-tax WACC	13.4%	15.5%


Selected WACC	14.4%

SPAL.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 SPAL.NS:

cost_of_equity (16.10%) = 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.