AMBIKCO.NS WACC - Weighted Average Cost of Capital

The WACC of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 12.6%.

The Cost of Equity of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 13.25%.

The Cost of Debt of Ambika Cotton Mills Ltd (AMBIKCO.NS) is 8.10%.

	Range	Selected
Cost of equity	11.40% - 15.10%	13.25%
Tax rate	25.60% - 26.20%	25.90%
Cost of debt	8.10% - 8.10%	8.10%
WACC	10.9% - 14.2%	12.6%

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	0.55	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	15.10%

Tax rate	25.60%	26.20%
Debt/Equity ratio	0.1	0.1
Cost of debt	8.10%	8.10%

After-tax WACC	10.9%	14.2%


Selected WACC	12.6%

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 (13.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.55) + 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.