The WACC of Ramkrishna Forgings Ltd (RKFORGE.NS) is 15.5%.
Range | Selected | |
Cost of equity | 15.2% - 18.0% | 16.6% |
Tax rate | 30.5% - 34.2% | 32.35% |
Cost of debt | 8.1% - 8.5% | 8.3% |
WACC | 14.3% - 16.7% | 15.5% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1 | 1.08 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 15.2% | 18.0% |
Tax rate | 30.5% | 34.2% |
Debt/Equity ratio | 0.11 | 0.11 |
Cost of debt | 8.1% | 8.5% |
After-tax WACC | 14.3% | 16.7% |
Selected WACC | 15.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
RKFORGE.NS | Ramkrishna Forgings Ltd | 0.11 | 1.59 | 1.48 |
511672.BO | Scan Steels Ltd | 0.54 | -0.06 | -0.05 |
GALLISPAT.NS | Gallantt Ispat Ltd | 0.18 | 1.09 | 0.98 |
HITECH.NS | Hi-Tech Pipes Ltd | 0.2 | 1.7 | 1.5 |
IMFA.NS | Indian Metals and Ferro Alloys Ltd | 0.05 | 1.13 | 1.09 |
KSL.NS | Kalyani Steels Ltd | 0.17 | 1.3 | 1.17 |
MMFL.NS | MM Forgings Ltd | 0.52 | 1.37 | 1.02 |
ROHITFERRO.NS | Rohit Ferro-Tech Ltd | 8.1 | 1.69 | 0.27 |
SARDAEN.NS | Sarda Energy & Minerals Ltd | 0.08 | 0.92 | 0.87 |
VISASTEEL.NS | Visa Steel Ltd | 3.75 | -0.33 | -0.1 |
Low | High | |
Unlevered beta | 0.94 | 1.05 |
Relevered beta | 1 | 1.12 |
Adjusted relevered beta | 1 | 1.08 |
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 (16.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1) + 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.