MMFL.NS WACC - Weighted Average Cost of Capital

The WACC of MM Forgings Ltd (MMFL.NS) is 15.1%.

The Cost of Equity of MM Forgings Ltd (MMFL.NS) is 19.90%.

The Cost of Debt of MM Forgings Ltd (MMFL.NS) is 7.90%.

	Range	Selected
Cost of equity	18.20% - 21.60%	19.90%
Tax rate	27.20% - 28.10%	27.65%
Cost of debt	6.70% - 9.10%	7.90%
WACC	13.7% - 16.5%	15.1%

WACC

MMFL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.36	1.47

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.20%	21.60%

Tax rate	27.20%	28.10%
Debt/Equity ratio	0.51	0.51
Cost of debt	6.70%	9.10%

After-tax WACC	13.7%	16.5%


Selected WACC	15.1%

MMFL.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 MMFL.NS:

cost_of_equity (19.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.36) + 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.