WHEELS.NS WACC - Weighted Average Cost of Capital

The WACC of Wheels India Ltd (WHEELS.NS) is 15.6%.

The Cost of Equity of Wheels India Ltd (WHEELS.NS) is 18.65%.

The Cost of Debt of Wheels India Ltd (WHEELS.NS) is 11.05%.

	Range	Selected
Cost of equity	16.90% - 20.40%	18.65%
Tax rate	22.20% - 23.20%	22.70%
Cost of debt	10.50% - 11.60%	11.05%
WACC	14.3% - 16.9%	15.6%

WACC

WHEELS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.21	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.90%	20.40%

Tax rate	22.20%	23.20%
Debt/Equity ratio	0.43	0.43
Cost of debt	10.50%	11.60%

After-tax WACC	14.3%	16.9%


Selected WACC	15.6%

WHEELS.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 WHEELS.NS:

cost_of_equity (18.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.21) + 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.