The WACC of Ishan Dyes and Chemicals Ltd (531109.BO) is 13.0%.
| Range | Selected | |
| Cost of equity | 11.50% - 13.70% | 12.60% |
| Tax rate | 23.30% - 26.00% | 24.65% |
| Cost of debt | 10.00% - 28.00% | 19.00% |
| WACC | 10.7% - 15.2% | 13.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.56 | 0.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.50% | 13.70% |
| Tax rate | 23.30% | 26.00% |
| Debt/Equity ratio | 0.28 | 0.28 |
| Cost of debt | 10.00% | 28.00% |
| After-tax WACC | 10.7% | 15.2% |
| Selected WACC | 13.0% | |
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 531109.BO:
cost_of_equity (12.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.56) + 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.