SUNDARMFIN.NS WACC - Weighted Average Cost of Capital

The WACC of Sundaram Finance Ltd (SUNDARMFIN.NS) is 13.1%.

The Cost of Equity of Sundaram Finance Ltd (SUNDARMFIN.NS) is 14.35%.

The Cost of Debt of Sundaram Finance Ltd (SUNDARMFIN.NS) is 15.80%.

	Range	Selected
Cost of equity	12.70% - 16.00%	14.35%
Tax rate	24.90% - 25.40%	25.15%
Cost of debt	7.70% - 23.90%	15.80%
WACC	9.4% - 16.9%	13.1%

WACC

SUNDARMFIN.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.7	0.87

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	16.00%

Tax rate	24.90%	25.40%
Debt/Equity ratio	0.92	0.92
Cost of debt	7.70%	23.90%

After-tax WACC	9.4%	16.9%


Selected WACC	13.1%

SUNDARMFIN.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 SUNDARMFIN.NS:

cost_of_equity (14.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.7) + 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.