LGBBROSLTD.NS WACC - Weighted Average Cost of Capital

The WACC of LG Balakrishnan & Bros Ltd (LGBBROSLTD.NS) is 16.5%.

The Cost of Equity of LG Balakrishnan & Bros Ltd (LGBBROSLTD.NS) is 16.85%.

The Cost of Debt of LG Balakrishnan & Bros Ltd (LGBBROSLTD.NS) is 7.20%.

	Range	Selected
Cost of equity	15.40% - 18.30%	16.85%
Tax rate	25.70% - 25.90%	25.80%
Cost of debt	6.90% - 7.50%	7.20%
WACC	15.1% - 18.0%	16.5%

WACC

LGBBROSLTD.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.02	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.40%	18.30%

Tax rate	25.70%	25.90%
Debt/Equity ratio	0.03	0.03
Cost of debt	6.90%	7.50%

After-tax WACC	15.1%	18.0%


Selected WACC	16.5%

LGBBROSLTD.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 LGBBROSLTD.NS:

cost_of_equity (16.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.02) + 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.