The WACC of Alembic Pharmaceuticals Ltd (APLLTD.NS) is 13.4%.
Range | Selected | |
Cost of equity | 12.7% - 14.9% | 13.8% |
Tax rate | 11.5% - 17.2% | 14.35% |
Cost of debt | 7.6% - 9.5% | 8.55% |
WACC | 12.4% - 14.5% | 13.4% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.71 | 0.76 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.7% | 14.9% |
Tax rate | 11.5% | 17.2% |
Debt/Equity ratio | 0.07 | 0.07 |
Cost of debt | 7.6% | 9.5% |
After-tax WACC | 12.4% | 14.5% |
Selected WACC | 13.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
APLLTD.NS | Alembic Pharmaceuticals Ltd | 0.07 | 0.89 | 0.85 |
AJANTPHARM.NS | Ajanta Pharma Ltd | 0 | 0.39 | 0.39 |
ALKEM.NS | Alkem Laboratories Ltd | 0.02 | 0.49 | 0.48 |
ERIS.NS | Eris Lifesciences Ltd | 0.11 | 0.7 | 0.64 |
GLAXO.NS | GlaxoSmithKline Pharmaceuticals Ltd | 0 | 0.57 | 0.57 |
IPCALAB.NS | IPCA Laboratories Ltd | 0.04 | 0.59 | 0.58 |
LAURUSLABS.NS | Laurus Labs Ltd | 0.06 | 1.14 | 1.08 |
PFIZER.NS | Pfizer Ltd | 0 | 0.45 | 0.45 |
SANOFI.NS | Sanofi India Ltd | 0 | 0.48 | 0.48 |
SUVENPHAR.NS | Suven Pharmaceuticals Ltd | 0 | 0.65 | 0.65 |
Low | High | |
Unlevered beta | 0.53 | 0.6 |
Relevered beta | 0.57 | 0.64 |
Adjusted relevered beta | 0.71 | 0.76 |
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 APLLTD.NS:
cost_of_equity (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.71) + 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.