EIHAHOTELS.NS WACC - Weighted Average Cost of Capital

The WACC of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 14.1%.

The Cost of Equity of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 14.20%.

The Cost of Debt of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 10.45%.

	Range	Selected
Cost of equity	11.70% - 16.70%	14.20%
Tax rate	25.50% - 26.50%	26.00%
Cost of debt	7.50% - 13.40%	10.45%
WACC	11.6% - 16.6%	14.1%

WACC

EIHAHOTELS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.58	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.70%	16.70%

Tax rate	25.50%	26.50%
Debt/Equity ratio	0	0
Cost of debt	7.50%	13.40%

After-tax WACC	11.6%	16.6%


Selected WACC	14.1%

EIHAHOTELS.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 EIHAHOTELS.NS:

cost_of_equity (14.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.58) + 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.