PATELENG.NS WACC - Weighted Average Cost of Capital

The WACC of Patel Engineering Ltd (PATELENG.NS) is 13.9%.

The Cost of Equity of Patel Engineering Ltd (PATELENG.NS) is 16.70%.

The Cost of Debt of Patel Engineering Ltd (PATELENG.NS) is 12.75%.

	Range	Selected
Cost of equity	13.00% - 20.40%	16.70%
Tax rate	23.80% - 30.80%	27.30%
Cost of debt	10.00% - 15.50%	12.75%
WACC	11.0% - 16.9%	13.9%

WACC

PATELENG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.73	1.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.00%	20.40%

Tax rate	23.80%	30.80%
Debt/Equity ratio	0.57	0.57
Cost of debt	10.00%	15.50%

After-tax WACC	11.0%	16.9%


Selected WACC	13.9%

PATELENG.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 PATELENG.NS:

cost_of_equity (16.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.73) + 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.