The WACC of Arvind Fashions Ltd (ARVINDFASN.NS) is 11.9%.
Range | Selected | |
Cost of equity | 11.8% - 14.0% | 12.9% |
Tax rate | 16.4% - 22.5% | 19.45% |
Cost of debt | 7.9% - 8.1% | 8% |
WACC | 11.0% - 12.8% | 11.9% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.6 | 0.66 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 11.8% | 14.0% |
Tax rate | 16.4% | 22.5% |
Debt/Equity ratio | 0.19 | 0.19 |
Cost of debt | 7.9% | 8.1% |
After-tax WACC | 11.0% | 12.8% |
Selected WACC | 11.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ARVINDFASN.NS | Arvind Fashions Ltd | 0.19 | 1.34 | 1.17 |
540615.BO | 7NR Retail Ltd | 0.35 | 0.63 | 0.49 |
7416.T | Haruyama Holdings Inc | 0.82 | 0.18 | 0.11 |
7445.T | Right On Co Ltd | 0.25 | 0.43 | 0.35 |
7494.T | Konaka Co Ltd | 1.88 | 0.69 | 0.27 |
887.HK | Emperor Watch & Jewellery Ltd | 0.18 | 0.44 | 0.38 |
9990.T | Sac's Bar Holdings Inc | 0.06 | 0.82 | 0.78 |
KHADIM.NS | Khadim India Ltd | 0.58 | 1.31 | 0.89 |
MOZ.AX | Mosaic Brands Ltd | 17.95 | 1.62 | 0.1 |
THOMASCOTT.NS | Thomas Scott (India) Ltd | 0.01 | 0.34 | 0.34 |
Low | High | |
Unlevered beta | 0.35 | 0.43 |
Relevered beta | 0.4 | 0.49 |
Adjusted relevered beta | 0.6 | 0.66 |
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 ARVINDFASN.NS:
cost_of_equity (12.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.6) + 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.