The WACC of Fermenta Biotech Ltd (506414.BO) is 12.6%.
| Range | Selected | |
| Cost of equity | 11.70% - 15.90% | 13.80% |
| Tax rate | 15.30% - 28.20% | 21.75% |
| Cost of debt | 7.80% - 8.30% | 8.05% |
| WACC | 10.9% - 14.4% | 12.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.58 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.70% | 15.90% |
| Tax rate | 15.30% | 28.20% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 7.80% | 8.30% |
| After-tax WACC | 10.9% | 14.4% |
| Selected WACC | 12.6% | |
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 506414.BO:
cost_of_equity (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.58) + 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.