STERTOOLS.NS WACC - Weighted Average Cost of Capital

The WACC of Sterling Tools Ltd (STERTOOLS.NS) is 17.1%.

The Cost of Equity of Sterling Tools Ltd (STERTOOLS.NS) is 18.15%.

The Cost of Debt of Sterling Tools Ltd (STERTOOLS.NS) is 8.05%.

	Range	Selected
Cost of equity	16.00% - 20.30%	18.15%
Tax rate	23.70% - 24.10%	23.90%
Cost of debt	7.90% - 8.20%	8.05%
WACC	15.1% - 19.1%	17.1%

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	1.1	1.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.00%	20.30%

Tax rate	23.70%	24.10%
Debt/Equity ratio	0.09	0.09
Cost of debt	7.90%	8.20%

After-tax WACC	15.1%	19.1%


Selected WACC	17.1%

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 (18.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.1) + 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.