RICOAUTO.NS WACC - Weighted Average Cost of Capital

The WACC of Rico Auto Industries Ltd (RICOAUTO.NS) is 14.3%.

The Cost of Equity of Rico Auto Industries Ltd (RICOAUTO.NS) is 19.50%.

The Cost of Debt of Rico Auto Industries Ltd (RICOAUTO.NS) is 10.25%.

	Range	Selected
Cost of equity	17.60% - 21.40%	19.50%
Tax rate	29.80% - 31.30%	30.55%
Cost of debt	8.40% - 12.10%	10.25%
WACC	12.7% - 15.9%	14.3%

WACC

RICOAUTO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.3	1.45

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.60%	21.40%

Tax rate	29.80%	31.30%
Debt/Equity ratio	0.72	0.72
Cost of debt	8.40%	12.10%

After-tax WACC	12.7%	15.9%


Selected WACC	14.3%

RICOAUTO.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 RICOAUTO.NS:

cost_of_equity (19.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.3) + 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.