PRECAM.NS WACC - Weighted Average Cost of Capital

The WACC of Precision Camshafts Ltd (PRECAM.NS) is 14.6%.

The Cost of Equity of Precision Camshafts Ltd (PRECAM.NS) is 15.15%.

The Cost of Debt of Precision Camshafts Ltd (PRECAM.NS) is 6.60%.

	Range	Selected
Cost of equity	13.60% - 16.70%	15.15%
Tax rate	29.60% - 33.70%	31.65%
Cost of debt	5.30% - 7.90%	6.60%
WACC	13.1% - 16.1%	14.6%

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	0.81	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.60%	16.70%

Tax rate	29.60%	33.70%
Debt/Equity ratio	0.06	0.06
Cost of debt	5.30%	7.90%

After-tax WACC	13.1%	16.1%


Selected WACC	14.6%

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 (15.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.81) + 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.