A STUDY ON COST OF CAPITAL ESTIMATION IN MANUFACTURING FIRMS AT BHARAT FORGE

Abstract

The cost of capital significantly influences a business's investment decisions, expansion strategies, and financial planning processes. Manufacturing businesses can enhance their financial strategy and boost the value of their shares by knowing the true cost of capital. This is because capital expenditures on equipment, software, and general company operations can add up quickly for manufacturers. A prominent player in India's automotive and industrial manufacturing industries, Bharat Forge is the focus of this article, which analyzes the company's use of debt and equity financing. It examines the process of calculating the WACC, the cost of debt, and the cost of equity by considering market circumstances, benchmarks, and business risks. This case study analyses Bharat Forge's market performance and financial statements to draw conclusions about the company's risk management, funding source selection, and return on investment (ROI) strategies for sustaining growth over the long term. Finding the correct cost of capital is more than simply a technical exercise, as the data demonstrate. It's a strategic tool that manufacturing organizations can use to stay competitive in an uncertain economic environment and come up with good ideas.