The WACC of Mac Charles (India) Ltd (507836.BO) is 16.1%.
| Range | Selected | |
| Cost of equity | 12.00% - 16.10% | 14.05% |
| Tax rate | 2.70% - 7.50% | 5.10% |
| Cost of debt | 10.80% - 26.90% | 18.85% |
| WACC | 11.1% - 21.1% | 16.1% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.62 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 16.10% |
| Tax rate | 2.70% | 7.50% |
| Debt/Equity ratio | 1.36 | 1.36 |
| Cost of debt | 10.80% | 26.90% |
| After-tax WACC | 11.1% | 21.1% |
| Selected WACC | 16.1% | |
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 507836.BO:
cost_of_equity (14.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.62) + 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.