The WACC of Titagarh Wagons Ltd (TWL.NS) is 13.6%.
| Range | Selected | |
| Cost of equity | 12.10% - 16.70% | 14.40% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 7.40% - 8.70% | 8.05% |
| WACC | 11.5% - 15.8% | 13.6% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.55 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.10% | 16.70% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 0.1 | 0.1 |
| Cost of debt | 7.40% | 8.70% |
| After-tax WACC | 11.5% | 15.8% |
| Selected WACC | 13.6% | |
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 TWL.NS:
cost_of_equity (14.40%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (0.55) + 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.