The WACC of Ashiana Ispat Ltd (513401.BO) is 16.4%.
| Range | Selected | |
| Cost of equity | 26.60% - 33.90% | 30.25% |
| Tax rate | 17.10% - 22.50% | 19.80% |
| Cost of debt | 8.50% - 26.90% | 17.70% |
| WACC | 10.0% - 22.8% | 16.4% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 2.37 | 2.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 26.60% | 33.90% |
| Tax rate | 17.10% | 22.50% |
| Debt/Equity ratio | 5.69 | 5.69 |
| Cost of debt | 8.50% | 26.90% |
| After-tax WACC | 10.0% | 22.8% |
| Selected WACC | 16.4% | |
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 513401.BO:
cost_of_equity (30.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (2.37) + 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.