The WACC of Technocraft Industries (India) Ltd (TIIL.NS) is 16.0%.
| Range | Selected | |
| Cost of equity | 15.70% - 18.70% | 17.20% |
| Tax rate | 22.90% - 23.90% | 23.40% |
| Cost of debt | 4.50% - 7.60% | 6.05% |
| WACC | 14.5% - 17.4% | 16.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.07 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.70% | 18.70% |
| Tax rate | 22.90% | 23.90% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.50% | 7.60% |
| After-tax WACC | 14.5% | 17.4% |
| Selected WACC | 16.0% | |
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 TIIL.NS:
cost_of_equity (17.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.07) + 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.