TIMKEN.NS WACC - Weighted Average Cost of Capital

The WACC of Timken India Ltd (TIMKEN.NS) is 15.8%.

The Cost of Equity of Timken India Ltd (TIMKEN.NS) is 15.85%.

The Cost of Debt of Timken India Ltd (TIMKEN.NS) is 9.40%.

	Range	Selected
Cost of equity	14.20% - 17.50%	15.85%
Tax rate	25.30% - 25.40%	25.35%
Cost of debt	7.50% - 11.30%	9.40%
WACC	14.2% - 17.5%	15.8%

WACC

TIMKEN.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.88	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.20%	17.50%

Tax rate	25.30%	25.40%
Debt/Equity ratio	0	0
Cost of debt	7.50%	11.30%

After-tax WACC	14.2%	17.5%


Selected WACC	15.8%

TIMKEN.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 TIMKEN.NS:

cost_of_equity (15.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.88) + 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.