The WACC of Machino Plastics Ltd (523248.BO) is 16.7%.
| Range | Selected | |
| Cost of equity | 24.40% - 29.30% | 26.85% |
| Tax rate | 27.00% - 28.60% | 27.80% |
| Cost of debt | 9.40% - 18.60% | 14.00% |
| WACC | 13.7% - 19.6% | 16.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 2.12 | 2.31 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 24.40% | 29.30% |
| Tax rate | 27.00% | 28.60% |
| Debt/Equity ratio | 1.55 | 1.55 |
| Cost of debt | 9.40% | 18.60% |
| After-tax WACC | 13.7% | 19.6% |
| Selected WACC | 16.7% | |
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 523248.BO:
cost_of_equity (26.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (2.12) + 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.