The WACC of Suryachakra Power Corp Ltd (532874.BO) is 5.9%.
| Range | Selected | |
| Cost of equity | 12.70% - 15.40% | 14.05% |
| Tax rate | 30.00% - 31.80% | 30.90% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.6% - 6.1% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.83 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.70% | 15.40% |
| Tax rate | 30.00% | 31.80% |
| Debt/Equity ratio | 3.42 | 3.42 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.6% | 6.1% |
| Selected WACC | 5.9% | |
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 532874.BO:
cost_of_equity (14.05%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (0.83) + 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.