RICOAUTO.NS WACC - Weighted Average Cost of Capital

The WACC of Rico Auto Industries Ltd (RICOAUTO.NS) is 13.8%.

The Cost of Equity of Rico Auto Industries Ltd (RICOAUTO.NS) is 18.65%.

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

	Range	Selected
Cost of equity	16.70% - 20.60%	18.65%
Tax rate	29.80% - 31.30%	30.55%
Cost of debt	8.40% - 12.10%	10.25%
WACC	12.2% - 15.5%	13.8%

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	1.19	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.70%	20.60%

Tax rate	29.80%	31.30%
Debt/Equity ratio	0.71	0.71
Cost of debt	8.40%	12.10%

After-tax WACC	12.2%	15.5%


Selected WACC	13.8%

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 (18.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.19) + 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.