RML.NS WACC - Weighted Average Cost of Capital

The WACC of Rane (Madras) Ltd (RML.NS) is 16.0%.

The Cost of Equity of Rane (Madras) Ltd (RML.NS) is 18.25%.

The Cost of Debt of Rane (Madras) Ltd (RML.NS) is 11.80%.

	Range	Selected
Cost of equity	16.90% - 19.60%	18.25%
Tax rate	30.00% - 30.00%	30.00%
Cost of debt	8.20% - 15.40%	11.80%
WACC	14.4% - 17.6%	16.0%

WACC

RML.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.21	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.90%	19.60%

Tax rate	30.00%	30.00%
Debt/Equity ratio	0.3	0.3
Cost of debt	8.20%	15.40%

After-tax WACC	14.4%	17.6%


Selected WACC	16.0%

RML.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 RML.NS:

cost_of_equity (18.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.21) + 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.