502873.BO WACC - Weighted Average Cost of Capital

The WACC of H P Cotton Textile Mills Ltd (502873.BO) is 12.1%.

The Cost of Equity of H P Cotton Textile Mills Ltd (502873.BO) is 14.55%.

The Cost of Debt of H P Cotton Textile Mills Ltd (502873.BO) is 13.95%.

	Range	Selected
Cost of equity	12.20% - 16.90%	14.55%
Tax rate	30.20% - 33.20%	31.70%
Cost of debt	12.10% - 15.80%	13.95%
WACC	10.4% - 13.8%	12.1%

WACC

502873.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.64	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.20%	16.90%

Tax rate	30.20%	33.20%
Debt/Equity ratio	0.95	0.95
Cost of debt	12.10%	15.80%

After-tax WACC	10.4%	13.8%


Selected WACC	12.1%

502873.BO'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 502873.BO:

cost_of_equity (14.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.64) + 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.