TGBHOTELS.NS WACC - Weighted Average Cost of Capital

The WACC of TGB Banquets and Hotels Ltd (TGBHOTELS.NS) is 10.3%.

The Cost of Equity of TGB Banquets and Hotels Ltd (TGBHOTELS.NS) is 12.30%.

The Cost of Debt of TGB Banquets and Hotels Ltd (TGBHOTELS.NS) is 7.30%.

	Range	Selected
Cost of equity	11.00% - 13.60%	12.30%
Tax rate	4.00% - 8.50%	6.25%
Cost of debt	7.00% - 7.60%	7.30%
WACC	9.5% - 11.2%	10.3%

WACC

TGBHOTELS.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	0.62

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	13.60%

Tax rate	4.00%	8.50%
Debt/Equity ratio	0.58	0.58
Cost of debt	7.00%	7.60%

After-tax WACC	9.5%	11.2%


Selected WACC	10.3%

TGBHOTELS.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 TGBHOTELS.NS:

cost_of_equity (12.30%) = 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.