BHARATFORG.NS WACC - Weighted Average Cost of Capital

The WACC of Bharat Forge Ltd (BHARATFORG.NS) is 13.9%.

The Cost of Equity of Bharat Forge Ltd (BHARATFORG.NS) is 15.35%.

The Cost of Debt of Bharat Forge Ltd (BHARATFORG.NS) is 6.30%.

	Range	Selected
Cost of equity	14.10% - 16.60%	15.35%
Tax rate	31.00% - 37.50%	34.25%
Cost of debt	4.00% - 8.60%	6.30%
WACC	12.6% - 15.2%	13.9%

WACC

BHARATFORG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.87	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.10%	16.60%

Tax rate	31.00%	37.50%
Debt/Equity ratio	0.15	0.15
Cost of debt	4.00%	8.60%

After-tax WACC	12.6%	15.2%


Selected WACC	13.9%

BHARATFORG.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 BHARATFORG.NS:

cost_of_equity (15.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.87) + 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.