CTE.NS WACC - Weighted Average Cost of Capital

The WACC of Cambridge Technology Enterprises Ltd (CTE.NS) is 10.1%.

The Cost of Equity of Cambridge Technology Enterprises Ltd (CTE.NS) is 17.65%.

The Cost of Debt of Cambridge Technology Enterprises Ltd (CTE.NS) is 6.50%.

	Range	Selected
Cost of equity	15.30% - 20.00%	17.65%
Tax rate	14.90% - 17.90%	16.40%
Cost of debt	6.00% - 7.00%	6.50%
WACC	9.0% - 11.2%	10.1%

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	1.01	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.30%	20.00%

Tax rate	14.90%	17.90%
Debt/Equity ratio	1.6	1.6
Cost of debt	6.00%	7.00%

After-tax WACC	9.0%	11.2%


Selected WACC	10.1%

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 (17.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.01) + 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.