The WACC of DCM Financial Services Ltd (DCMFINSERV.NS) is 6.2%.
Range | Selected | |
Cost of equity | 10.2% - 16.5% | 13.35% |
Tax rate | 30.0% - 30.0% | 30% |
Cost of debt | 7.0% - 7.0% | 7% |
WACC | 5.7% - 6.6% | 6.2% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.4 | 0.93 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.2% | 16.5% |
Tax rate | 30.0% | 30.0% |
Debt/Equity ratio | 5.72 | 5.72 |
Cost of debt | 7.0% | 7.0% |
After-tax WACC | 5.7% | 6.6% |
Selected WACC | 6.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
DCMFINSERV.NS | DCM Financial Services Ltd | 5.72 | 0.69 | 0.14 |
Low | High | |
Unlevered beta | 0.14 | 0.14 |
Relevered beta | 0.1 | 0.9 |
Adjusted relevered beta | 0.4 | 0.93 |
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 DCMFINSERV.NS:
cost_of_equity (13.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.4) + 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.