532933.BO WACC - Weighted Average Cost of Capital

The WACC of Porwal Auto Components Ltd (532933.BO) is 15.0%.

The Cost of Equity of Porwal Auto Components Ltd (532933.BO) is 14.90%.

The Cost of Debt of Porwal Auto Components Ltd (532933.BO) is 24.50%.

	Range	Selected
Cost of equity	13.50% - 16.30%	14.90%
Tax rate	14.60% - 47.90%	31.25%
Cost of debt	22.10% - 26.90%	24.50%
WACC	14.0% - 16.1%	15.0%

WACC

532933.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.8	0.9

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.50%	16.30%

Tax rate	14.60%	47.90%
Debt/Equity ratio	0.09	0.09
Cost of debt	22.10%	26.90%

After-tax WACC	14.0%	16.1%


Selected WACC	15.0%

532933.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 532933.BO:

cost_of_equity (14.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.8) + 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.