The WACC of Pratiksha Chemicals Ltd (531257.BO) is 10.5%.
| Range | Selected | |
| Cost of equity | 10.20% - 11.90% | 11.05% |
| Tax rate | 12.70% - 19.90% | 16.30% |
| Cost of debt | 7.00% - 13.90% | 10.45% |
| WACC | 9.2% - 11.7% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.4 | 0.43 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 11.90% |
| Tax rate | 12.70% | 19.90% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 7.00% | 13.90% |
| After-tax WACC | 9.2% | 11.7% |
| Selected WACC | 10.5% | |
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 531257.BO:
cost_of_equity (11.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.4) + 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.