EMKAYTOOLS.NS WACC - Weighted Average Cost of Capital

The WACC of Emkay Taps And Cutting Tools Ltd (EMKAYTOOLS.NS) is 16.3%.

The Cost of Equity of Emkay Taps And Cutting Tools Ltd (EMKAYTOOLS.NS) is 16.80%.

The Cost of Debt of Emkay Taps And Cutting Tools Ltd (EMKAYTOOLS.NS) is 7.50%.

	Range	Selected
Cost of equity	15.60% - 18.00%	16.80%
Tax rate	19.10% - 20.00%	19.55%
Cost of debt	7.50% - 7.50%	7.50%
WACC	15.2% - 17.5%	16.3%

WACC

EMKAYTOOLS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.05	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.60%	18.00%

Tax rate	19.10%	20.00%
Debt/Equity ratio	0.04	0.04
Cost of debt	7.50%	7.50%

After-tax WACC	15.2%	17.5%


Selected WACC	16.3%

EMKAYTOOLS.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 EMKAYTOOLS.NS:

cost_of_equity (16.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.05) + 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.