INDIANHUME.NS WACC - Weighted Average Cost of Capital

The WACC of Indian Hume Pipe Company Ltd (INDIANHUME.NS) is 18.4%.

The Cost of Equity of Indian Hume Pipe Company Ltd (INDIANHUME.NS) is 20.50%.

The Cost of Debt of Indian Hume Pipe Company Ltd (INDIANHUME.NS) is 10.50%.

	Range	Selected
Cost of equity	18.80% - 22.20%	20.50%
Tax rate	24.20% - 25.40%	24.80%
Cost of debt	10.00% - 11.00%	10.50%
WACC	16.9% - 19.9%	18.4%

WACC

INDIANHUME.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.43	1.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.80%	22.20%

Tax rate	24.20%	25.40%
Debt/Equity ratio	0.2	0.2
Cost of debt	10.00%	11.00%

After-tax WACC	16.9%	19.9%


Selected WACC	18.4%

INDIANHUME.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 INDIANHUME.NS:

cost_of_equity (20.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.43) + 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.