The WACC of HB Estate Developers Ltd (532334.BO) is 10.3%.
| Range | Selected | |
| Cost of equity | 14.70% - 21.00% | 17.85% |
| Tax rate | 31.00% - 38.30% | 34.65% |
| Cost of debt | 6.60% - 10.50% | 8.55% |
| WACC | 8.5% - 12.2% | 10.3% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.94 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.70% | 21.00% |
| Tax rate | 31.00% | 38.30% |
| Debt/Equity ratio | 1.55 | 1.55 |
| Cost of debt | 6.60% | 10.50% |
| After-tax WACC | 8.5% | 12.2% |
| Selected WACC | 10.3% | |
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 532334.BO:
cost_of_equity (17.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.94) + 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.