INDOTECH.NS WACC - Weighted Average Cost of Capital

The WACC of Indo Tech Transformers Ltd (INDOTECH.NS) is 16.3%.

The Cost of Equity of Indo Tech Transformers Ltd (INDOTECH.NS) is 16.35%.

The Cost of Debt of Indo Tech Transformers Ltd (INDOTECH.NS) is 7.50%.

	Range	Selected
Cost of equity	15.10% - 17.60%	16.35%
Tax rate	1.80% - 8.70%	5.25%
Cost of debt	7.50% - 7.50%	7.50%
WACC	15.0% - 17.6%	16.3%

WACC

INDOTECH.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.99	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.10%	17.60%

Tax rate	1.80%	8.70%
Debt/Equity ratio	0	0
Cost of debt	7.50%	7.50%

After-tax WACC	15.0%	17.6%


Selected WACC	16.3%

INDOTECH.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 INDOTECH.NS:

cost_of_equity (16.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.99) + 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.