ROHLTD.NS WACC - Weighted Average Cost of Capital

The WACC of Royal Orchid Hotels Ltd (ROHLTD.NS) is 12.4%.

The Cost of Equity of Royal Orchid Hotels Ltd (ROHLTD.NS) is 13.15%.

The Cost of Debt of Royal Orchid Hotels Ltd (ROHLTD.NS) is 8.80%.

	Range	Selected
Cost of equity	11.20% - 15.10%	13.15%
Tax rate	15.40% - 20.70%	18.05%
Cost of debt	8.10% - 9.50%	8.80%
WACC	10.6% - 14.1%	12.4%

WACC

ROHLTD.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.52	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	15.10%

Tax rate	15.40%	20.70%
Debt/Equity ratio	0.15	0.15
Cost of debt	8.10%	9.50%

After-tax WACC	10.6%	14.1%


Selected WACC	12.4%

ROHLTD.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 ROHLTD.NS:

cost_of_equity (13.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.52) + 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.