Cost of Capital Dynamics A Five-Year Trend and Peer Benchmarking Study

Over FY2022–FY2026, Dabur India Ltd. maintained a stable WACC of 11.55%–12.20%, the result of an equity-dominated capital structure in which debt never exceeded 1.74% of the market value. The cost of equity, not the cost of debt, is the primary determinant of Dabur’s weighted average cost of capital (WACC). Its year-on-year movement is driven by risk-free rates. Its level depends on a beta of 0.83, which places Dabur’s cost of capital slightly above HUL’s and approximately 1.2 percentage points above Marico’s.   Regarding financing strategy, Dabur’s conservative leverage leaves room to raise low-cost debt for future growth capital expenditure or acquisitions (such as the ongoing Dabur–Sesa Care amalgamation). Because debt’s weight is small and interest is tax-deductible, this would not materially raise the blended cost of capital. For capital budgeting, the computed WACC of approximately 11.5–12.2% is the minimum hurdle rate that Dabur should require for new investments financed at its current blended cost of capital. Because this figure is almost entirely an equity cost, project appraisal should focus on the assumptions embedded in Ke, mainly the beta estimate and equity risk premium. Project NPVs should also be tested against plausible alternatives, such as the 0.65 beta obtained when the March 2026 selloff is excluded.

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