PRAJIND.NS WACC - Weighted Average Cost of Capital

The WACC of Praj Industries Ltd (PRAJIND.NS) is 13.5%.

The Cost of Equity of Praj Industries Ltd (PRAJIND.NS) is 13.35%.

The Cost of Debt of Praj Industries Ltd (PRAJIND.NS) is 29.35%.

	Range	Selected
Cost of equity	10.70% - 16.00%	13.35%
Tax rate	26.00% - 26.70%	26.35%
Cost of debt	7.60% - 51.10%	29.35%
WACC	10.6% - 16.4%	13.5%

WACC

PRAJIND.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.47	0.87

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.70%	16.00%

Tax rate	26.00%	26.70%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.60%	51.10%

After-tax WACC	10.6%	16.4%


Selected WACC	13.5%

PRAJIND.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 PRAJIND.NS:

cost_of_equity (13.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.47) + 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.