RAMASTEEL.NS WACC - Weighted Average Cost of Capital

The WACC of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 13.1%.

The Cost of Equity of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 13.40%.

The Cost of Debt of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 11.80%.

	Range	Selected
Cost of equity	12.00% - 14.80%	13.40%
Tax rate	20.70% - 21.30%	21.00%
Cost of debt	9.10% - 14.50%	11.80%
WACC	11.7% - 14.5%	13.1%

WACC

RAMASTEEL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.62	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.00%	14.80%

Tax rate	20.70%	21.30%
Debt/Equity ratio	0.08	0.08
Cost of debt	9.10%	14.50%

After-tax WACC	11.7%	14.5%


Selected WACC	13.1%

RAMASTEEL.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 RAMASTEEL.NS:

cost_of_equity (13.40%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.62) + 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.