524037.BO
Rama Phosphates Ltd
Price:  
139.6 
INR
Volume:  
9,161
India | Chemicals

524037.BO WACC - Weighted Average Cost of Capital

The WACC of Rama Phosphates Ltd (524037.BO) is 15.0%.

The Cost of Equity of Rama Phosphates Ltd (524037.BO) is 15.05%.
The Cost of Debt of Rama Phosphates Ltd (524037.BO) is 20.3%.

RangeSelected
Cost of equity13.3% - 16.8%15.05%
Tax rate25.6% - 28.9%27.25%
Cost of debt8.2% - 32.4%20.3%
WACC12.6% - 17.4%15.0%
WACC

524037.BO WACC calculation

CategoryLowHigh
Long-term bond rate7.5%8.0%
Equity market risk premium6.9%7.9%
Adjusted beta0.831.05
Additional risk adjustments0.0%0.5%
Cost of equity13.3%16.8%
Tax rate25.6%28.9%
Debt/Equity ratio
0.10.1
Cost of debt8.2%32.4%
After-tax WACC12.6%17.4%
Selected WACC15.0%

524037.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 524037.BO:

cost_of_equity (15.05%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.83) + 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.