The WACC of K G Denim Ltd (500239.BO) is 9.6%.
| Range | Selected | |
| Cost of equity | 11.10% - 20.90% | 16.00% |
| Tax rate | 24.40% - 26.20% | 25.30% |
| Cost of debt | 11.60% - 12.10% | 11.85% |
| WACC | 9.0% - 10.2% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.51 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.10% | 20.90% |
| Tax rate | 24.40% | 26.20% |
| Debt/Equity ratio | 8.15 | 8.15 |
| Cost of debt | 11.60% | 12.10% |
| After-tax WACC | 9.0% | 10.2% |
| Selected WACC | 9.6% | |
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 500239.BO:
cost_of_equity (16.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.51) + 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.