The WACC of Sarthak Metals Ltd (540393.BO) is 12.0%.
| Range | Selected | |
| Cost of equity | 11.60% - 14.30% | 12.95% |
| Tax rate | 28.20% - 30.00% | 29.10% |
| Cost of debt | 9.80% - 11.30% | 10.55% |
| WACC | 10.8% - 13.1% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.59 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.60% | 14.30% |
| Tax rate | 28.20% | 30.00% |
| Debt/Equity ratio | 0.22 | 0.22 |
| Cost of debt | 9.80% | 11.30% |
| After-tax WACC | 10.8% | 13.1% |
| Selected WACC | 12.0% | |
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 540393.BO:
cost_of_equity (12.95%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.59) + 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.