533033.BO WACC - Weighted Average Cost of Capital

The WACC of Isgec Heavy Engineering Ltd (533033.BO) is 14.2%.

The Cost of Equity of Isgec Heavy Engineering Ltd (533033.BO) is 16.35%.

The Cost of Debt of Isgec Heavy Engineering Ltd (533033.BO) is 9.70%.

	Range	Selected
Cost of equity	15.00% - 17.70%	16.35%
Tax rate	32.70% - 32.90%	32.80%
Cost of debt	8.80% - 10.60%	9.70%
WACC	13.0% - 15.4%	14.2%

WACC

533033.BO WACC calculation

Category	Low	High

Long-term bond rate	7.5%	8.0%
Equity market risk premium	6.9%	7.9%
Adjusted beta	1.07	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	17.70%

Tax rate	32.70%	32.90%
Debt/Equity ratio	0.28	0.28
Cost of debt	8.80%	10.60%

After-tax WACC	13.0%	15.4%


Selected WACC	14.2%

533033.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 533033.BO:

cost_of_equity (16.35%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * 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.