The WACC of Mahalaxmi Rubtech Ltd (514450.BO) is 11.8%.
| Range | Selected | |
| Cost of equity | 12.10% - 14.90% | 13.50% |
| Tax rate | 22.40% - 26.50% | 24.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.6% - 12.9% | 11.8% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.66 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.10% | 14.90% |
| Tax rate | 22.40% | 26.50% |
| Debt/Equity ratio | 0.22 | 0.22 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.6% | 12.9% |
| Selected WACC | 11.8% | |
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 514450.BO:
cost_of_equity (13.50%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.66) + 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.