The WACC of Panchmahal Steel Ltd (513511.BO) is 13.8%.
| Range | Selected | |
| Cost of equity | 13.10% - 15.70% | 14.40% |
| Tax rate | 19.30% - 25.40% | 22.35% |
| Cost of debt | 12.10% - 15.20% | 13.65% |
| WACC | 12.6% - 15.0% | 13.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.75 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.10% | 15.70% |
| Tax rate | 19.30% | 25.40% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 12.10% | 15.20% |
| After-tax WACC | 12.6% | 15.0% |
| Selected WACC | 13.8% | |
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 513511.BO:
cost_of_equity (14.40%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.75) + 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.