RAMASTEEL.NS WACC - Weighted Average Cost of Capital

The WACC of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 13.4%.

The Cost of Equity of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 13.80%.

The Cost of Debt of Rama Steel Tubes Ltd (RAMASTEEL.NS) is 10.80%.

	Range	Selected
Cost of equity	12.20% - 15.40%	13.80%
Tax rate	20.70% - 21.30%	21.00%
Cost of debt	10.00% - 11.60%	10.80%
WACC	11.9% - 14.9%	13.4%

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	0.64	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.20%	15.40%

Tax rate	20.70%	21.30%
Debt/Equity ratio	0.09	0.09
Cost of debt	10.00%	11.60%

After-tax WACC	11.9%	14.9%


Selected WACC	13.4%

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 (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.64) + 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.