RVNL.NS WACC - Weighted Average Cost of Capital

The WACC of Rail Vikas Nigam Ltd (RVNL.NS) is 14.8%.

The Cost of Equity of Rail Vikas Nigam Ltd (RVNL.NS) is 15.65%.

The Cost of Debt of Rail Vikas Nigam Ltd (RVNL.NS) is 6.30%.

	Range	Selected
Cost of equity	14.30% - 17.00%	15.65%
Tax rate	22.20% - 22.30%	22.25%
Cost of debt	4.00% - 8.60%	6.30%
WACC	13.4% - 16.2%	14.8%

WACC

RVNL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.89	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	17.00%

Tax rate	22.20%	22.30%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	8.60%

After-tax WACC	13.4%	16.2%


Selected WACC	14.8%

RVNL.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 RVNL.NS:

cost_of_equity (15.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.89) + 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.