The WACC of Bajaj Electricals Ltd (BAJAJELEC.NS) is 15.3%.
Range | Selected | |
Cost of equity | 13.7% - 16.9% | 15.3% |
Tax rate | 22.6% - 24.0% | 23.3% |
Cost of debt | 9.1% - 24.7% | 16.9% |
WACC | 13.6% - 16.9% | 15.3% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.83 | 0.97 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.7% | 16.9% |
Tax rate | 22.6% | 24.0% |
Debt/Equity ratio | 0.03 | 0.03 |
Cost of debt | 9.1% | 24.7% |
After-tax WACC | 13.6% | 16.9% |
Selected WACC | 15.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BAJAJELEC.NS | Bajaj Electricals Ltd | 0.03 | 1.63 | 1.59 |
508486.BO | Hawkins Cookers Ltd | 0.01 | 0.71 | 0.71 |
AMBER.NS | Amber Enterprises India Ltd | 0.05 | 0.77 | 0.74 |
BUTTERFLY.NS | Butterfly Gandhimathi Appliances Ltd | 0 | 0.98 | 0.98 |
CROMPTON.NS | Crompton Greaves Consumer Electricals Ltd | 0.03 | 0.95 | 0.92 |
IFBIND.NS | IFB Industries Ltd | 0.03 | 1.69 | 1.66 |
JCHAC.NS | Johnson Controls-Hitachi Air Conditioning India Ltd | 0.01 | 0.56 | 0.56 |
ORIENTELEC.NS | Orient Electric Ltd | 0.02 | 0.96 | 0.95 |
SYMPHONY.NS | Symphony Ltd | 0.02 | 0.29 | 0.29 |
TTKPRESTIG.NS | TTK Prestige Ltd | 0.02 | 0.61 | 0.6 |
Low | High | |
Unlevered beta | 0.73 | 0.93 |
Relevered beta | 0.75 | 0.96 |
Adjusted relevered beta | 0.83 | 0.97 |
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 BAJAJELEC.NS:
cost_of_equity (15.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.83) + 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.