PRECAM.NS WACC - Weighted Average Cost of Capital

The WACC of Precision Camshafts Ltd (PRECAM.NS) is 14.4%.

The Cost of Equity of Precision Camshafts Ltd (PRECAM.NS) is 15.05%.

The Cost of Debt of Precision Camshafts Ltd (PRECAM.NS) is 6.80%.

	Range	Selected
Cost of equity	13.30% - 16.80%	15.05%
Tax rate	26.30% - 29.60%	27.95%
Cost of debt	5.50% - 8.10%	6.80%
WACC	12.8% - 16.1%	14.4%

WACC

PRECAM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.78	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.30%	16.80%

Tax rate	26.30%	29.60%
Debt/Equity ratio	0.07	0.07
Cost of debt	5.50%	8.10%

After-tax WACC	12.8%	16.1%


Selected WACC	14.4%

PRECAM.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 PRECAM.NS:

cost_of_equity (15.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.78) + 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.