The WACC of Shree Bhawani Paper Mills Ltd (502563.BO) is 4.5%.
| Range | Selected | |
| Cost of equity | 17.10% - 43.20% | 30.15% |
| Tax rate | 30.00% - 31.80% | 30.90% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.0% - 5.0% | 4.5% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 1.47 | 4.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.10% | 43.20% |
| Tax rate | 30.00% | 31.80% |
| Debt/Equity ratio | 24.71 | 24.71 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.0% | 5.0% |
| Selected WACC | 4.5% | |
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 502563.BO:
cost_of_equity (30.15%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (1.47) + 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.