SOFTTECH.NS WACC - Weighted Average Cost of Capital

The WACC of SoftTech Engineers Ltd (SOFTTECH.NS) is 11.8%.

The Cost of Equity of SoftTech Engineers Ltd (SOFTTECH.NS) is 12.35%.

The Cost of Debt of SoftTech Engineers Ltd (SOFTTECH.NS) is 10.45%.

	Range	Selected
Cost of equity	10.90% - 13.80%	12.35%
Tax rate	31.50% - 34.40%	32.95%
Cost of debt	8.80% - 12.10%	10.45%
WACC	10.4% - 13.3%	11.8%

WACC

SOFTTECH.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.48	0.64

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	13.80%

Tax rate	31.50%	34.40%
Debt/Equity ratio	0.1	0.1
Cost of debt	8.80%	12.10%

After-tax WACC	10.4%	13.3%


Selected WACC	11.8%

SOFTTECH.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 SOFTTECH.NS:

cost_of_equity (12.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.48) + 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.