The WACC of Richa Industries Ltd (532766.BO) is 11.4%.
| Range | Selected | |
| Cost of equity | 28.00% - 101.80% | 64.90% |
| Tax rate | 1.80% - 10.30% | 6.05% |
| Cost of debt | 7.00% - 15.30% | 11.15% |
| WACC | 7.3% - 15.4% | 11.4% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 3.05 | 11.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 28.00% | 101.80% |
| Tax rate | 1.80% | 10.30% |
| Debt/Equity ratio | 50.09 | 50.09 |
| Cost of debt | 7.00% | 15.30% |
| After-tax WACC | 7.3% | 15.4% |
| Selected WACC | 11.4% | |
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 532766.BO:
cost_of_equity (64.90%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (3.05) + 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.