SETCO.NS WACC - Weighted Average Cost of Capital

The WACC of Setco Automotive Ltd (SETCO.NS) is 23.3%.

The Cost of Equity of Setco Automotive Ltd (SETCO.NS) is 28.70%.

The Cost of Debt of Setco Automotive Ltd (SETCO.NS) is 22.55%.

	Range	Selected
Cost of equity	25.80% - 31.60%	28.70%
Tax rate	2.70% - 3.60%	3.15%
Cost of debt	18.20% - 26.90%	22.55%
WACC	19.5% - 27.2%	23.3%

WACC

SETCO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	2.27	2.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	25.80%	31.60%

Tax rate	2.70%	3.60%
Debt/Equity ratio	3.47	3.47
Cost of debt	18.20%	26.90%

After-tax WACC	19.5%	27.2%


Selected WACC	23.3%

SETCO.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 SETCO.NS:

cost_of_equity (28.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (2.27) + 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.