KIRLOSENG.NS WACC - Weighted Average Cost of Capital

The WACC of Kirloskar Oil Engines Ltd (KIRLOSENG.NS) is 15.7%.

The Cost of Equity of Kirloskar Oil Engines Ltd (KIRLOSENG.NS) is 19.55%.

The Cost of Debt of Kirloskar Oil Engines Ltd (KIRLOSENG.NS) is 5.75%.

	Range	Selected
Cost of equity	17.70% - 21.40%	19.55%
Tax rate	26.20% - 26.50%	26.35%
Cost of debt	4.00% - 7.50%	5.75%
WACC	14.0% - 17.5%	15.7%

WACC

KIRLOSENG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.3	1.45

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.70%	21.40%

Tax rate	26.20%	26.50%
Debt/Equity ratio	0.33	0.33
Cost of debt	4.00%	7.50%

After-tax WACC	14.0%	17.5%


Selected WACC	15.7%

KIRLOSENG.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 KIRLOSENG.NS:

cost_of_equity (19.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.3) + 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.