506852.BO WACC - Weighted Average Cost of Capital

The WACC of Punjab Alkalies and Chemicals Ltd (506852.BO) is 14.9%.

The Cost of Equity of Punjab Alkalies and Chemicals Ltd (506852.BO) is 16.65%.

The Cost of Debt of Punjab Alkalies and Chemicals Ltd (506852.BO) is 10.80%.

	Range	Selected
Cost of equity	14.80% - 18.50%	16.65%
Tax rate	26.20% - 40.20%	33.20%
Cost of debt	9.10% - 12.50%	10.80%
WACC	13.3% - 16.4%	14.9%

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	0.96	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.80%	18.50%

Tax rate	26.20%	40.20%
Debt/Equity ratio	0.23	0.23
Cost of debt	9.10%	12.50%

After-tax WACC	13.3%	16.4%


Selected WACC	14.9%

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 (16.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.96) + 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.