RKFORGE.NS WACC - Weighted Average Cost of Capital

The WACC of Ramkrishna Forgings Ltd (RKFORGE.NS) is 15.6%.

The Cost of Equity of Ramkrishna Forgings Ltd (RKFORGE.NS) is 17.30%.

The Cost of Debt of Ramkrishna Forgings Ltd (RKFORGE.NS) is 9.50%.

	Range	Selected
Cost of equity	15.30% - 19.30%	17.30%
Tax rate	31.80% - 34.20%	33.00%
Cost of debt	9.10% - 9.90%	9.50%
WACC	13.9% - 17.3%	15.6%

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	1.01	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.30%	19.30%

Tax rate	31.80%	34.20%
Debt/Equity ratio	0.18	0.18
Cost of debt	9.10%	9.90%

After-tax WACC	13.9%	17.3%


Selected WACC	15.6%

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 (17.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.01) + 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.