522267.BO WACC - Weighted Average Cost of Capital

The WACC of Veejay Lakshmi Engineering Works Ltd (522267.BO) is 16.8%.

The Cost of Equity of Veejay Lakshmi Engineering Works Ltd (522267.BO) is 17.15%.

The Cost of Debt of Veejay Lakshmi Engineering Works Ltd (522267.BO) is 17.90%.

	Range	Selected
Cost of equity	15.80% - 18.50%	17.15%
Tax rate	3.40% - 10.50%	6.95%
Cost of debt	8.90% - 26.90%	17.90%
WACC	12.4% - 21.1%	16.8%

WACC

522267.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.07	1.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.80%	18.50%

Tax rate	3.40%	10.50%
Debt/Equity ratio	0.9	0.9
Cost of debt	8.90%	26.90%

After-tax WACC	12.4%	21.1%


Selected WACC	16.8%

522267.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 522267.BO:

cost_of_equity (17.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.07) + 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.