AMBIKCO.NS WACC - Weighted Average Cost of Capital

The WACC of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 12.7%.

The Cost of Equity of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 13.30%.

The Cost of Debt of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 7.90%.

	Range	Selected
Cost of equity	11.50% - 15.10%	13.30%
Tax rate	26.20% - 26.40%	26.30%
Cost of debt	7.90% - 7.90%	7.90%
WACC	11.0% - 14.3%	12.7%

WACC

AMBIKCO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.56	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	15.10%

Tax rate	26.20%	26.40%
Debt/Equity ratio	0.09	0.09
Cost of debt	7.90%	7.90%

After-tax WACC	11.0%	14.3%


Selected WACC	12.7%

AMBIKCO.NS'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 AMBIKCO.NS:

cost_of_equity (13.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.56) + 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.