STERTOOLS.NS WACC - Weighted Average Cost of Capital

The WACC of Sterling Tools Ltd (STERTOOLS.NS) is 15.6%.

The Cost of Equity of Sterling Tools Ltd (STERTOOLS.NS) is 17.65%.

The Cost of Debt of Sterling Tools Ltd (STERTOOLS.NS) is 7.70%.

	Range	Selected
Cost of equity	15.00% - 20.30%	17.65%
Tax rate	23.70% - 24.10%	23.90%
Cost of debt	7.50% - 7.90%	7.70%
WACC	13.3% - 17.8%	15.6%

WACC

STERTOOLS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.97	1.33

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	20.30%

Tax rate	23.70%	24.10%
Debt/Equity ratio	0.21	0.21
Cost of debt	7.50%	7.90%

After-tax WACC	13.3%	17.8%


Selected WACC	15.6%

STERTOOLS.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 STERTOOLS.NS:

cost_of_equity (17.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.97) + 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.