The WACC of Basant Agro Tech (India) Ltd (524687.BO) is 14.8%.
| Range | Selected | |
| Cost of equity | 16.50% - 19.80% | 18.15% |
| Tax rate | 5.90% - 12.30% | 9.10% |
| Cost of debt | 12.10% - 12.70% | 12.40% |
| WACC | 14.0% - 15.5% | 14.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.16 | 1.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.50% | 19.80% |
| Tax rate | 5.90% | 12.30% |
| Debt/Equity ratio | 0.96 | 0.96 |
| Cost of debt | 12.10% | 12.70% |
| After-tax WACC | 14.0% | 15.5% |
| Selected WACC | 14.8% | |
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 524687.BO:
cost_of_equity (18.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.16) + 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.