RAMCOCEM.NS WACC - Weighted Average Cost of Capital

The WACC of Ramco Cements Ltd (RAMCOCEM.NS) is 14.1%.

The Cost of Equity of Ramco Cements Ltd (RAMCOCEM.NS) is 15.80%.

The Cost of Debt of Ramco Cements Ltd (RAMCOCEM.NS) is 8.65%.

	Range	Selected
Cost of equity	14.20% - 17.40%	15.80%
Tax rate	25.90% - 27.40%	26.65%
Cost of debt	5.20% - 12.10%	8.65%
WACC	12.4% - 15.9%	14.1%

WACC

RAMCOCEM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.88	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.20%	17.40%

Tax rate	25.90%	27.40%
Debt/Equity ratio	0.22	0.22
Cost of debt	5.20%	12.10%

After-tax WACC	12.4%	15.9%


Selected WACC	14.1%

RAMCOCEM.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 RAMCOCEM.NS:

cost_of_equity (15.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.88) + 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.