ESSARSHPNG.NS WACC - Weighted Average Cost of Capital

The WACC of Essar Shipping Ltd (ESSARSHPNG.NS) is 12.1%.

The Cost of Equity of Essar Shipping Ltd (ESSARSHPNG.NS) is 14.90%.

The Cost of Debt of Essar Shipping Ltd (ESSARSHPNG.NS) is 11.30%.

	Range	Selected
Cost of equity	11.90% - 17.90%	14.90%
Tax rate	0.30% - 0.50%	0.40%
Cost of debt	4.00% - 18.60%	11.30%
WACC	5.8% - 18.4%	12.1%

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	0.6	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	17.90%

Tax rate	0.30%	0.50%
Debt/Equity ratio	3.37	3.37
Cost of debt	4.00%	18.60%

After-tax WACC	5.8%	18.4%


Selected WACC	12.1%

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 (14.90%) = 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.