EIHOTEL.NS
EIH Ltd
Price:  
371.55 
INR
Volume:  
1,388,214
India | Hotels, Restaurants & Leisure

EIHOTEL.NS WACC - Weighted Average Cost of Capital

The WACC of EIH Ltd (EIHOTEL.NS) is 14.9%.

The Cost of Equity of EIH Ltd (EIHOTEL.NS) is 15%.
The Cost of Debt of EIH Ltd (EIHOTEL.NS) is 6%.

RangeSelected
Cost of equity13.2% - 16.8%15%
Tax rate23.7% - 25.5%24.6%
Cost of debt4.5% - 7.5%6%
WACC13.1% - 16.7%14.9%
WACC

EIHOTEL.NS WACC calculation

CategoryLowHigh
Long-term bond rate6.9%7.4%
Equity market risk premium8.3%9.3%
Adjusted beta0.760.96
Additional risk adjustments0.0%0.5%
Cost of equity13.2%16.8%
Tax rate23.7%25.5%
Debt/Equity ratio
0.010.01
Cost of debt4.5%7.5%
After-tax WACC13.1%16.7%
Selected WACC14.9%

EIHOTEL.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 EIHOTEL.NS:

cost_of_equity (15.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.76) + 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.