BBTC.NS WACC - Weighted Average Cost of Capital

The WACC of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 16.5%.

The Cost of Equity of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 18.45%.

The Cost of Debt of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 7.40%.

	Range	Selected
Cost of equity	17.00% - 19.90%	18.45%
Tax rate	36.50% - 42.50%	39.50%
Cost of debt	7.30% - 7.50%	7.40%
WACC	15.3% - 17.7%	16.5%

WACC

BBTC.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.22	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.00%	19.90%

Tax rate	36.50%	42.50%
Debt/Equity ratio	0.16	0.16
Cost of debt	7.30%	7.50%

After-tax WACC	15.3%	17.7%


Selected WACC	16.5%

BBTC.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 BBTC.NS:

cost_of_equity (18.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.22) + 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.