The WACC of Stylam Industries Ltd (526951.BO) is 12.5%.
| Range | Selected | |
| Cost of equity | 10.70% - 14.60% | 12.65% |
| Tax rate | 32.30% - 37.90% | 35.10% |
| Cost of debt | 8.70% - 8.70% | 8.70% |
| WACC | 10.6% - 14.3% | 12.5% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.46 | 0.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.70% | 14.60% |
| Tax rate | 32.30% | 37.90% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 8.70% | 8.70% |
| After-tax WACC | 10.6% | 14.3% |
| Selected WACC | 12.5% | |
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 526951.BO:
cost_of_equity (12.65%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.46) + 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.