CTE.NS WACC - Weighted Average Cost of Capital

The WACC of Cambridge Technology Enterprises Ltd (CTE.NS) is 10.5%.

The Cost of Equity of Cambridge Technology Enterprises Ltd (CTE.NS) is 14.70%.

The Cost of Debt of Cambridge Technology Enterprises Ltd (CTE.NS) is 7.15%.

	Range	Selected
Cost of equity	12.50% - 16.90%	14.70%
Tax rate	12.60% - 17.90%	15.25%
Cost of debt	7.00% - 7.30%	7.15%
WACC	9.4% - 11.5%	10.5%

WACC

CTE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.68	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.50%	16.90%

Tax rate	12.60%	17.90%
Debt/Equity ratio	0.96	0.96
Cost of debt	7.00%	7.30%

After-tax WACC	9.4%	11.5%


Selected WACC	10.5%

CTE.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 CTE.NS:

cost_of_equity (14.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.68) + 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.