The WACC of Sturdy Industries Ltd (530611.BO) is 5.1%.
| Range | Selected | |
| Cost of equity | 47.70% - 121.50% | 84.60% |
| Tax rate | 24.40% - 28.30% | 26.35% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.1% - 6.1% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 4.92 | 12.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 47.70% | 121.50% |
| Tax rate | 24.40% | 28.30% |
| Debt/Equity ratio | 40.22 | 40.22 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.1% | 6.1% |
| Selected WACC | 5.1% | |
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 530611.BO:
cost_of_equity (84.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (4.92) + 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.