507962.BO WACC - Weighted Average Cost of Capital
The WACC of Rajath Finance Ltd (507962.BO) is 7.9%.
| Range | Selected | |
| Cost of equity | 10.9% - 14.1% | 12.5% |
| Tax rate | 16.0% - 17.1% | 16.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.2% - 8.6% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.58 | 0.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.9% | 14.1% |
| Tax rate | 16.0% | 17.1% |
| Debt/Equity ratio | 1.23 | 1.23 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.2% | 8.6% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 507962.BO | Rajath Finance Ltd | 1.23 | 0.92 | 0.45 |
| 509051.BO | Indian Infotech and Software Ltd | 1.17 | 3.55 | 1.79 |
| 511355.BO | India Cements Capital Ltd | 1.44 | 0.5 | 0.23 |
| 519214.BO | Williamson Financial Services Ltd | 64.1 | 0.15 | 0 |
| 531255.BO | Paragon Finance Ltd | 0.03 | 0.57 | 0.55 |
| 532056.BO | Adinath Exim Resources Ltd | 0.94 | 0.86 | 0.48 |
| 535667.BO | India Finsec Ltd | 0.42 | -0.43 | -0.31 |
| 538834.BO | Meenakshi Enterprises Ltd | 0.34 | 0.3 | 0.23 |
| 539839.BO | Franklin Leasing and Finance Ltd | 0.99 | 3.55 | 1.93 |
| DCMFINSERV.NS | DCM Financial Services Ltd | 5.72 | 0.69 | 0.12 |
| Low | High | |
| Unlevered beta | 0.23 | 0.46 |
| Relevered beta | 0.37 | 0.67 |
| Adjusted relevered beta | 0.58 | 0.78 |
507962.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 507962.BO:
cost_of_equity (12.50%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (0.58) + 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.