VSSL.NS WACC - Weighted Average Cost of Capital

The WACC of Vardhman Special Steels Ltd (VSSL.NS) is 16.3%.

The Cost of Equity of Vardhman Special Steels Ltd (VSSL.NS) is 16.70%.

The Cost of Debt of Vardhman Special Steels Ltd (VSSL.NS) is 10.70%.

	Range	Selected
Cost of equity	15.00% - 18.40%	16.70%
Tax rate	25.50% - 28.70%	27.10%
Cost of debt	7.80% - 13.60%	10.70%
WACC	14.6% - 18.0%	16.3%

WACC

VSSL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.98	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	18.40%

Tax rate	25.50%	28.70%
Debt/Equity ratio	0.04	0.04
Cost of debt	7.80%	13.60%

After-tax WACC	14.6%	18.0%


Selected WACC	16.3%

VSSL.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 VSSL.NS:

cost_of_equity (16.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.98) + 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.