ESCORTS.NS WACC - Weighted Average Cost of Capital

The WACC of Escorts Ltd (ESCORTS.NS) is 17.5%.

The Cost of Equity of Escorts Ltd (ESCORTS.NS) is 17.50%.

The Cost of Debt of Escorts Ltd (ESCORTS.NS) is 16.65%.

	Range	Selected
Cost of equity	15.10% - 19.90%	17.50%
Tax rate	24.20% - 24.70%	24.45%
Cost of debt	7.50% - 25.80%	16.65%
WACC	15.0% - 19.9%	17.5%

WACC

ESCORTS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.99	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.10%	19.90%

Tax rate	24.20%	24.70%
Debt/Equity ratio	0	0
Cost of debt	7.50%	25.80%

After-tax WACC	15.0%	19.9%


Selected WACC	17.5%

ESCORTS.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 ESCORTS.NS:

cost_of_equity (17.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.99) + 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.