The WACC of Manomay Tex India Ltd (540396.BO) is 10.5%.
| Range | Selected | |
| Cost of equity | 12.10% - 15.90% | 14.00% |
| Tax rate | 34.10% - 39.70% | 36.90% |
| Cost of debt | 8.70% - 12.30% | 10.50% |
| WACC | 9.1% - 11.9% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 7.4% | 7.9% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.68 | 0.94 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.10% | 15.90% |
| Tax rate | 34.10% | 39.70% |
| Debt/Equity ratio | 0.88 | 0.88 |
| Cost of debt | 8.70% | 12.30% |
| After-tax WACC | 9.1% | 11.9% |
| 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 540396.BO:
cost_of_equity (14.00%) = risk_free_rate (7.65%) + equity_risk_premium (7.40%) * adjusted_beta (0.68) + 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.