The WACC of Confidence Petroleum India Ltd (CONFIPET.NS) is 16.4%.
Range | Selected | |
Cost of equity | 17.20% - 20.20% | 18.70% |
Tax rate | 24.90% - 25.60% | 25.25% |
Cost of debt | 10.50% - 17.20% | 13.85% |
WACC | 14.7% - 18.2% | 16.4% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1.24 | 1.32 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 17.20% | 20.20% |
Tax rate | 24.90% | 25.60% |
Debt/Equity ratio | 0.37 | 0.37 |
Cost of debt | 10.50% | 17.20% |
After-tax WACC | 14.7% | 18.2% |
Selected WACC | 16.4% | |
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 CONFIPET.NS:
cost_of_equity (18.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.24) + 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.