502873.BO WACC - Weighted Average Cost of Capital

The WACC of H P Cotton Textile Mills Ltd (502873.BO) is 13.3%.

The Cost of Equity of H P Cotton Textile Mills Ltd (502873.BO) is 12.05%.

The Cost of Debt of H P Cotton Textile Mills Ltd (502873.BO) is 20.45%.

	Range	Selected
Cost of equity	10.40% - 13.70%	12.05%
Tax rate	20.50% - 29.90%	25.20%
Cost of debt	18.60% - 22.30%	20.45%
WACC	12.2% - 14.5%	13.3%

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	0.42	0.63

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	13.70%

Tax rate	20.50%	29.90%
Debt/Equity ratio	0.68	0.68
Cost of debt	18.60%	22.30%

After-tax WACC	12.2%	14.5%


Selected WACC	13.3%

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 (12.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.42) + 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.