506852.BO WACC - Weighted Average Cost of Capital

The WACC of Punjab Alkalies and Chemicals Ltd (506852.BO) is 12.8%.

The Cost of Equity of Punjab Alkalies and Chemicals Ltd (506852.BO) is 15.25%.

The Cost of Debt of Punjab Alkalies and Chemicals Ltd (506852.BO) is 10.55%.

	Range	Selected
Cost of equity	13.70% - 16.80%	15.25%
Tax rate	26.20% - 40.20%	33.20%
Cost of debt	8.60% - 12.50%	10.55%
WACC	11.6% - 14.1%	12.8%

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	0.83	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.70%	16.80%

Tax rate	26.20%	40.20%
Debt/Equity ratio	0.41	0.41
Cost of debt	8.60%	12.50%

After-tax WACC	11.6%	14.1%


Selected WACC	12.8%

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 (15.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.83) + 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.