EIHOTEL.NS WACC - Weighted Average Cost of Capital

The WACC of EIH Ltd (EIHOTEL.NS) is 14.2%.

The Cost of Equity of EIH Ltd (EIHOTEL.NS) is 14.30%.

The Cost of Debt of EIH Ltd (EIHOTEL.NS) is 6.70%.

	Range	Selected
Cost of equity	11.60% - 17.00%	14.30%
Tax rate	23.70% - 25.50%	24.60%
Cost of debt	5.90% - 7.50%	6.70%
WACC	11.5% - 16.8%	14.2%

WACC

EIHOTEL.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	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	17.00%

Tax rate	23.70%	25.50%
Debt/Equity ratio	0.01	0.01
Cost of debt	5.90%	7.50%

After-tax WACC	11.5%	16.8%


Selected WACC	14.2%

EIHOTEL.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 EIHOTEL.NS:

cost_of_equity (14.30%) = 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.