STLTECH.NS WACC - Weighted Average Cost of Capital

The WACC of Sterlite Technologies Ltd (STLTECH.NS) is 15.9%.

The Cost of Equity of Sterlite Technologies Ltd (STLTECH.NS) is 18.85%.

The Cost of Debt of Sterlite Technologies Ltd (STLTECH.NS) is 17.65%.

	Range	Selected
Cost of equity	15.80% - 21.90%	18.85%
Tax rate	28.20% - 29.80%	29.00%
Cost of debt	11.40% - 23.90%	17.65%
WACC	12.3% - 19.6%	15.9%

WACC

STLTECH.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.07	1.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.80%	21.90%

Tax rate	28.20%	29.80%
Debt/Equity ratio	0.83	0.83
Cost of debt	11.40%	23.90%

After-tax WACC	12.3%	19.6%


Selected WACC	15.9%

STLTECH.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 STLTECH.NS:

cost_of_equity (18.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.07) + 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.