SANGHVIFOR.NS WACC - Weighted Average Cost of Capital

The WACC of Sanghvi Forging and Engineering Ltd (SANGHVIFOR.NS) is 6.8%.

The Cost of Equity of Sanghvi Forging and Engineering Ltd (SANGHVIFOR.NS) is 14.80%.

The Cost of Debt of Sanghvi Forging and Engineering Ltd (SANGHVIFOR.NS) is 7.95%.

	Range	Selected
Cost of equity	11.20% - 18.40%	14.80%
Tax rate	30.00% - 31.80%	30.90%
Cost of debt	7.00% - 8.90%	7.95%
WACC	5.8% - 7.8%	6.8%

WACC

SANGHVIFOR.NS WACC calculation

Category	Low	High

Long-term bond rate	7.5%	8.0%
Equity market risk premium	6.9%	7.9%
Adjusted beta	0.53	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	18.40%

Tax rate	30.00%	31.80%
Debt/Equity ratio	5.93	5.93
Cost of debt	7.00%	8.90%

After-tax WACC	5.8%	7.8%


Selected WACC	6.8%

SANGHVIFOR.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 SANGHVIFOR.NS:

cost_of_equity (14.80%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.53) + 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.