The WACC of Indsil Hydro Power and Manganese Ltd (522165.BO) is 13.0%.
| Range | Selected | |
| Cost of equity | 15.80% - 20.70% | 18.25% |
| Tax rate | 7.80% - 11.60% | 9.70% |
| Cost of debt | 7.50% - 9.70% | 8.60% |
| WACC | 11.3% - 14.6% | 13.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.08 | 1.37 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.80% | 20.70% |
| Tax rate | 7.80% | 11.60% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.50% | 9.70% |
| After-tax WACC | 11.3% | 14.6% |
| Selected WACC | 13.0% | |
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 522165.BO:
cost_of_equity (18.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.08) + 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.