506852.BO WACC - Weighted Average Cost of Capital

The WACC of Punjab Alkalies and Chemicals Ltd (506852.BO) is 12.2%.

The Cost of Equity of Punjab Alkalies and Chemicals Ltd (506852.BO) is 13.85%.

The Cost of Debt of Punjab Alkalies and Chemicals Ltd (506852.BO) is 9.90%.

	Range	Selected
Cost of equity	12.30% - 15.40%	13.85%
Tax rate	26.20% - 37.20%	31.70%
Cost of debt	7.00% - 12.80%	9.90%
WACC	10.7% - 13.8%	12.2%

WACC

506852.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.65	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.30%	15.40%

Tax rate	26.20%	37.20%
Debt/Equity ratio	0.29	0.29
Cost of debt	7.00%	12.80%

After-tax WACC	10.7%	13.8%


Selected WACC	12.2%

506852.BO's CAPM model and how its cost of Equity is calculated

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 506852.BO:

cost_of_equity (13.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.65) + 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.