The WACC of J L Morison (India) Ltd (506522.BO) is 14.2%.
| Range | Selected | |
| Cost of equity | 12.70% - 15.70% | 14.20% |
| Tax rate | 22.10% - 22.50% | 22.30% |
| Cost of debt | 7.50% - 10.00% | 8.75% |
| WACC | 12.7% - 15.7% | 14.2% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.7 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.70% | 15.70% |
| Tax rate | 22.10% | 22.50% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 7.50% | 10.00% |
| After-tax WACC | 12.7% | 15.7% |
| Selected WACC | 14.2% | |
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 506522.BO:
cost_of_equity (14.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.7) + 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.