VOLTAS.NS WACC - Weighted Average Cost of Capital

The WACC of Voltas Ltd (VOLTAS.NS) is 12.4%.

The Cost of Equity of Voltas Ltd (VOLTAS.NS) is 12.50%.

The Cost of Debt of Voltas Ltd (VOLTAS.NS) is 9.90%.

	Range	Selected
Cost of equity	11.60% - 13.40%	12.50%
Tax rate	27.30% - 31.70%	29.50%
Cost of debt	7.80% - 12.00%	9.90%
WACC	11.5% - 13.3%	12.4%

WACC

VOLTAS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.57	0.6

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	13.40%

Tax rate	27.30%	31.70%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.80%	12.00%

After-tax WACC	11.5%	13.3%


Selected WACC	12.4%

VOLTAS.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 VOLTAS.NS:

cost_of_equity (12.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.57) + 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.