GRSE.NS WACC - Weighted Average Cost of Capital

The WACC of Garden Reach Shipbuilders & Engineers Ltd (GRSE.NS) is 16.3%.

The Cost of Equity of Garden Reach Shipbuilders & Engineers Ltd (GRSE.NS) is 16.30%.

The Cost of Debt of Garden Reach Shipbuilders & Engineers Ltd (GRSE.NS) is 38.65%.

	Range	Selected
Cost of equity	14.00% - 18.60%	16.30%
Tax rate	25.50% - 25.80%	25.65%
Cost of debt	7.50% - 69.80%	38.65%
WACC	14.0% - 18.6%	16.3%

WACC

GRSE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.86	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.00%	18.60%

Tax rate	25.50%	25.80%
Debt/Equity ratio	0	0
Cost of debt	7.50%	69.80%

After-tax WACC	14.0%	18.6%


Selected WACC	16.3%

GRSE.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 GRSE.NS:

cost_of_equity (16.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.86) + 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.