The WACC of Orissa Bengal Carrier Ltd (541206.BO) is 13.4%.
| Range | Selected | |
| Cost of equity | 12.60% - 15.70% | 14.15% |
| Tax rate | 27.80% - 30.10% | 28.95% |
| Cost of debt | 8.80% - 11.10% | 9.95% |
| WACC | 11.9% - 14.9% | 13.4% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.73 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.60% | 15.70% |
| Tax rate | 27.80% | 30.10% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 8.80% | 11.10% |
| After-tax WACC | 11.9% | 14.9% |
| Selected WACC | 13.4% | |
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 541206.BO:
cost_of_equity (14.15%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.73) + 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.