The WACC of Majestic Auto Ltd (500267.BO) is 14.8%.
| Range | Selected | |
| Cost of equity | 17.60% - 20.80% | 19.20% |
| Tax rate | 47.50% - 48.40% | 47.95% |
| Cost of debt | 7.20% - 10.50% | 8.85% |
| WACC | 13.4% - 16.1% | 14.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.3 | 1.39 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.60% | 20.80% |
| Tax rate | 47.50% | 48.40% |
| Debt/Equity ratio | 0.44 | 0.44 |
| Cost of debt | 7.20% | 10.50% |
| After-tax WACC | 13.4% | 16.1% |
| Selected WACC | 14.8% | |
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 500267.BO:
cost_of_equity (19.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.3) + 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.