RECLTD.NS
REC Ltd
Price:  
423.30 
INR
Volume:  
5,223,773.00
India | Diversified Financial Services
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RECLTD.NS WACC - Weighted Average Cost of Capital

The WACC of REC Ltd (RECLTD.NS) is 6.4%.

The Cost of Equity of REC Ltd (RECLTD.NS) is 16.45%.
The Cost of Debt of REC Ltd (RECLTD.NS) is 5.00%.

Range Selected
Cost of equity 10.00% - 22.90% 16.45%
Tax rate 20.60% - 21.70% 21.15%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.2% - 7.7% 6.4%
WACC

RECLTD.NS WACC calculation

Category Low High
Long-term bond rate 6.9% 7.4%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.38 1.61
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.00% 22.90%
Tax rate 20.60% 21.70%
Debt/Equity ratio 4.03 4.03
Cost of debt 5.00% 5.00%
After-tax WACC 5.2% 7.7%
Selected WACC 6.4%

RECLTD.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 RECLTD.NS:

cost_of_equity (16.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.38) + 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.