RKFORGE.NS WACC - Weighted Average Cost of Capital

The WACC of Ramkrishna Forgings Ltd (RKFORGE.NS) is 15.2%.

The Cost of Equity of Ramkrishna Forgings Ltd (RKFORGE.NS) is 16.30%.

The Cost of Debt of Ramkrishna Forgings Ltd (RKFORGE.NS) is 8.30%.

	Range	Selected
Cost of equity	14.80% - 17.80%	16.30%
Tax rate	30.50% - 34.20%	32.35%
Cost of debt	8.10% - 8.50%	8.30%
WACC	13.9% - 16.6%	15.2%

WACC

RKFORGE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.96	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.80%	17.80%

Tax rate	30.50%	34.20%
Debt/Equity ratio	0.11	0.11
Cost of debt	8.10%	8.50%

After-tax WACC	13.9%	16.6%


Selected WACC	15.2%

RKFORGE.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 RKFORGE.NS:

cost_of_equity (16.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.96) + 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.