BHEL.NS WACC - Weighted Average Cost of Capital
The WACC of Bharat Heavy Electricals Ltd (BHEL.NS) is 18.1%.
| Range | Selected | |
| Cost of equity | 15.6% - 22.5% | 19.05% |
| Tax rate | 13.2% - 19.8% | 16.5% |
| Cost of debt | 9.1% - 10.5% | 9.8% |
| WACC | 14.9% - 21.3% | 18.1% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.05 | 1.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.6% | 22.5% |
| Tax rate | 13.2% | 19.8% |
| Debt/Equity ratio | 0.1 | 0.1 |
| Cost of debt | 9.1% | 10.5% |
| After-tax WACC | 14.9% | 21.3% |
| Selected WACC | 18.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BHEL.NS | Bharat Heavy Electricals Ltd | 0.1 | 1.94 | 1.8 |
| 517467.BO | Marsons Ltd | 0 | -1.06 | -1.06 |
| 540358.BO | RMC Switchgears Ltd | 0.06 | 0.03 | 0.02 |
| 607.HK | Fullshare Holdings Ltd | 53.36 | 1.25 | 0.03 |
| ABB.NS | ABB India Ltd | 0 | 1.63 | 1.63 |
| ELECON.NS | Elecon Engineering Company Ltd | 0.01 | 2.01 | 1.99 |
| GET&D.NS | Ge T&D India Ltd | 0 | 1.87 | 1.87 |
| INDLMETER.NS | IMP Powers Ltd | 52.95 | 1.18 | 0.03 |
| SUZLON.NS | Suzlon Energy Ltd | 0 | 1.8 | 1.79 |
| TRITURBINE.NS | Triveni Turbine Ltd | 0 | 1.67 | 1.67 |
| Low | High | |
| Unlevered beta | 0.99 | 1.72 |
| Relevered beta | 1.07 | 1.87 |
| Adjusted relevered beta | 1.05 | 1.58 |
BHEL.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 BHEL.NS:
cost_of_equity (19.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.05) + 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.