RANEENGINE.NS WACC - Weighted Average Cost of Capital

The WACC of Rane Engine Valve Ltd (RANEENGINE.NS) is 12.0%.

The Cost of Equity of Rane Engine Valve Ltd (RANEENGINE.NS) is 15.70%.

The Cost of Debt of Rane Engine Valve Ltd (RANEENGINE.NS) is 7.80%.

	Range	Selected
Cost of equity	14.30% - 17.10%	15.70%
Tax rate	32.00% - 36.10%	34.05%
Cost of debt	7.00% - 8.60%	7.80%
WACC	11.0% - 13.1%	12.0%

WACC

RANEENGINE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.89	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	17.10%

Tax rate	32.00%	36.10%
Debt/Equity ratio	0.53	0.53
Cost of debt	7.00%	8.60%

After-tax WACC	11.0%	13.1%


Selected WACC	12.0%

RANEENGINE.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 RANEENGINE.NS:

cost_of_equity (15.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.89) + 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.