The WACC of Arihant Foundations & Housing Ltd (ARIHANT.NS) is 11.0%.
| Range | Selected | |
| Cost of equity | 11.50% - 16.50% | 14.00% |
| Tax rate | 26.40% - 47.50% | 36.95% |
| Cost of debt | 11.40% - 25.00% | 18.20% |
| WACC | 8.7% - 13.4% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.58 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.50% | 16.50% |
| Tax rate | 26.40% | 47.50% |
| Debt/Equity ratio | 9.75 | 9.75 |
| Cost of debt | 11.40% | 25.00% |
| After-tax WACC | 8.7% | 13.4% |
| Selected WACC | 11.0% | |
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 ARIHANT.NS:
cost_of_equity (14.00%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.58) + 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.