504903.BO WACC - Weighted Average Cost of Capital

The WACC of Rathi Steel and Power Ltd (504903.BO) is 10.7%.

The Cost of Equity of Rathi Steel and Power Ltd (504903.BO) is 11.50%.

The Cost of Debt of Rathi Steel and Power Ltd (504903.BO) is 10.50%.

	Range	Selected
Cost of equity	9.80% - 13.20%	11.50%
Tax rate	30.00% - 30.00%	30.00%
Cost of debt	10.50% - 10.50%	10.50%
WACC	9.3% - 12.0%	10.7%

WACC

504903.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.36	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	13.20%

Tax rate	30.00%	30.00%
Debt/Equity ratio	0.26	0.26
Cost of debt	10.50%	10.50%

After-tax WACC	9.3%	12.0%


Selected WACC	10.7%

504903.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 504903.BO:

cost_of_equity (11.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.36) + 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.