SOFTTECH.NS WACC - Weighted Average Cost of Capital

The WACC of SoftTech Engineers Ltd (SOFTTECH.NS) is 12.1%.

The Cost of Equity of SoftTech Engineers Ltd (SOFTTECH.NS) is 12.65%.

The Cost of Debt of SoftTech Engineers Ltd (SOFTTECH.NS) is 8.10%.

	Range	Selected
Cost of equity	11.00% - 14.30%	12.65%
Tax rate	35.30% - 38.70%	37.00%
Cost of debt	7.60% - 8.60%	8.10%
WACC	10.6% - 13.6%	12.1%

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	0.5	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	14.30%

Tax rate	35.30%	38.70%
Debt/Equity ratio	0.08	0.08
Cost of debt	7.60%	8.60%

After-tax WACC	10.6%	13.6%


Selected WACC	12.1%

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 (12.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.5) + 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.