EIHAHOTELS.NS WACC - Weighted Average Cost of Capital

The WACC of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 13.8%.

The Cost of Equity of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 13.80%.

The Cost of Debt of EIH Associated Hotels Ltd (EIHAHOTELS.NS) is 11.65%.

	Range	Selected
Cost of equity	11.90% - 15.70%	13.80%
Tax rate	24.80% - 26.50%	25.65%
Cost of debt	7.50% - 15.80%	11.65%
WACC	11.9% - 15.7%	13.8%

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	0.6	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	15.70%

Tax rate	24.80%	26.50%
Debt/Equity ratio	0	0
Cost of debt	7.50%	15.80%

After-tax WACC	11.9%	15.7%


Selected WACC	13.8%

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 (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.6) + 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.