INDHOTEL.NS WACC - Weighted Average Cost of Capital

The WACC of Indian Hotels Company Ltd (INDHOTEL.NS) is 13.6%.

The Cost of Equity of Indian Hotels Company Ltd (INDHOTEL.NS) is 13.85%.

The Cost of Debt of Indian Hotels Company Ltd (INDHOTEL.NS) is 5.75%.

	Range	Selected
Cost of equity	12.10% - 15.60%	13.85%
Tax rate	21.70% - 24.30%	23.00%
Cost of debt	4.00% - 7.50%	5.75%
WACC	11.9% - 15.4%	13.6%

WACC

INDHOTEL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.63	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.10%	15.60%

Tax rate	21.70%	24.30%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	7.50%

After-tax WACC	11.9%	15.4%


Selected WACC	13.6%

INDHOTEL.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 INDHOTEL.NS:

cost_of_equity (13.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.63) + 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.