BBTC.NS WACC - Weighted Average Cost of Capital

The WACC of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 16.8%.

The Cost of Equity of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 18.30%.

The Cost of Debt of Bombay Burmah Trading Corporation Ltd (BBTC.NS) is 7.65%.

	Range	Selected
Cost of equity	16.80% - 19.80%	18.30%
Tax rate	36.60% - 42.50%	39.55%
Cost of debt	7.50% - 7.80%	7.65%
WACC	15.5% - 18.2%	16.8%

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	1.2	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.80%	19.80%

Tax rate	36.60%	42.50%
Debt/Equity ratio	0.12	0.12
Cost of debt	7.50%	7.80%

After-tax WACC	15.5%	18.2%


Selected WACC	16.8%

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 (18.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.2) + 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.