HFCL.NS WACC - Weighted Average Cost of Capital

The WACC of HFCL Ltd (HFCL.NS) is 13.1%.

The Cost of Equity of HFCL Ltd (HFCL.NS) is 13.25%.

The Cost of Debt of HFCL Ltd (HFCL.NS) is 14.55%.

	Range	Selected
Cost of equity	11.60% - 14.90%	13.25%
Tax rate	24.60% - 25.90%	25.25%
Cost of debt	9.10% - 20.00%	14.55%
WACC	11.3% - 14.9%	13.1%

WACC

HFCL.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	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	14.90%

Tax rate	24.60%	25.90%
Debt/Equity ratio	0.07	0.07
Cost of debt	9.10%	20.00%

After-tax WACC	11.3%	14.9%


Selected WACC	13.1%

HFCL.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 HFCL.NS:

cost_of_equity (13.25%) = 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.