ESSARSHPNG.NS WACC - Weighted Average Cost of Capital

The WACC of Essar Shipping Ltd (ESSARSHPNG.NS) is 8.5%.

The Cost of Equity of Essar Shipping Ltd (ESSARSHPNG.NS) is 18.70%.

The Cost of Debt of Essar Shipping Ltd (ESSARSHPNG.NS) is 5.75%.

	Range	Selected
Cost of equity	13.20% - 24.20%	18.70%
Tax rate	0.30% - 0.50%	0.40%
Cost of debt	4.00% - 7.50%	5.75%
WACC	6.0% - 11.0%	8.5%

WACC

ESSARSHPNG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.76	1.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	24.20%

Tax rate	0.30%	0.50%
Debt/Equity ratio	3.61	3.61
Cost of debt	4.00%	7.50%

After-tax WACC	6.0%	11.0%


Selected WACC	8.5%

ESSARSHPNG.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 ESSARSHPNG.NS:

cost_of_equity (18.70%) = 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.