540082.BO WACC - Weighted Average Cost of Capital

The WACC of Riddhi Steel and Tube Ltd (540082.BO) is 9.2%.

The Cost of Equity of Riddhi Steel and Tube Ltd (540082.BO) is 11.90%.

The Cost of Debt of Riddhi Steel and Tube Ltd (540082.BO) is 10.80%.

	Range	Selected
Cost of equity	10.50% - 13.30%	11.90%
Tax rate	28.20% - 31.70%	29.95%
Cost of debt	9.50% - 12.10%	10.80%
WACC	8.3% - 10.2%	9.2%

WACC

540082.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.44	0.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.50%	13.30%

Tax rate	28.20%	31.70%
Debt/Equity ratio	1.58	1.58
Cost of debt	9.50%	12.10%

After-tax WACC	8.3%	10.2%


Selected WACC	9.2%

540082.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 540082.BO:

cost_of_equity (11.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.44) + 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.