RAMCOIND.NS WACC - Weighted Average Cost of Capital

The WACC of Ramco Industries Ltd (RAMCOIND.NS) is 15.2%.

The Cost of Equity of Ramco Industries Ltd (RAMCOIND.NS) is 16.30%.

The Cost of Debt of Ramco Industries Ltd (RAMCOIND.NS) is 7.70%.

	Range	Selected
Cost of equity	14.50% - 18.10%	16.30%
Tax rate	33.40% - 33.90%	33.65%
Cost of debt	7.60% - 7.80%	7.70%
WACC	13.6% - 16.9%	15.2%

WACC

RAMCOIND.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.92	1.1

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.50%	18.10%

Tax rate	33.40%	33.90%
Debt/Equity ratio	0.1	0.1
Cost of debt	7.60%	7.80%

After-tax WACC	13.6%	16.9%


Selected WACC	15.2%

RAMCOIND.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 RAMCOIND.NS:

cost_of_equity (16.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.92) + 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.