SUNDARMFIN.NS WACC - Weighted Average Cost of Capital

The WACC of Sundaram Finance Ltd (SUNDARMFIN.NS) is 13.0%.

The Cost of Equity of Sundaram Finance Ltd (SUNDARMFIN.NS) is 15.05%.

The Cost of Debt of Sundaram Finance Ltd (SUNDARMFIN.NS) is 15.45%.

	Range	Selected
Cost of equity	12.90% - 17.20%	15.05%
Tax rate	25.10% - 25.50%	25.30%
Cost of debt	7.00% - 23.90%	15.45%
WACC	8.5% - 17.5%	13.0%

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	0.72	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.90%	17.20%

Tax rate	25.10%	25.50%
Debt/Equity ratio	1.35	1.35
Cost of debt	7.00%	23.90%

After-tax WACC	8.5%	17.5%


Selected WACC	13.0%

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 (15.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.