The WACC of Binayak Tex Processors Ltd (523054.BO) is 11.6%.
| Range | Selected | |
| Cost of equity | 12.40% - 15.60% | 14.00% |
| Tax rate | 28.40% - 30.20% | 29.30% |
| Cost of debt | 6.10% - 10.50% | 8.30% |
| WACC | 10.0% - 13.2% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.66 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.40% | 15.60% |
| Tax rate | 28.40% | 30.20% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 6.10% | 10.50% |
| After-tax WACC | 10.0% | 13.2% |
| Selected WACC | 11.6% | |
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 523054.BO:
cost_of_equity (14.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * 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.