STERTOOLS.NS WACC - Weighted Average Cost of Capital

The WACC of Sterling Tools Ltd (STERTOOLS.NS) is 16.5%.

The Cost of Equity of Sterling Tools Ltd (STERTOOLS.NS) is 17.55%.

The Cost of Debt of Sterling Tools Ltd (STERTOOLS.NS) is 7.55%.

	Range	Selected
Cost of equity	15.20% - 19.90%	17.55%
Tax rate	23.00% - 23.70%	23.35%
Cost of debt	7.30% - 7.80%	7.55%
WACC	14.4% - 18.7%	16.5%

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	1.01	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.20%	19.90%

Tax rate	23.00%	23.70%
Debt/Equity ratio	0.1	0.1
Cost of debt	7.30%	7.80%

After-tax WACC	14.4%	18.7%


Selected WACC	16.5%

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 (17.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.01) + 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.