The WACC of Emami Paper Mills Ltd (EMAMIPAP.NS) is 14.7%.
| Range | Selected | |
| Cost of equity | 17.90% - 22.10% | 20.00% |
| Tax rate | 25.00% - 25.40% | 25.20% |
| Cost of debt | 7.20% - 18.60% | 12.90% |
| WACC | 11.5% - 17.9% | 14.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.33 | 1.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.90% | 22.10% |
| Tax rate | 25.00% | 25.40% |
| Debt/Equity ratio | 1.04 | 1.04 |
| Cost of debt | 7.20% | 18.60% |
| After-tax WACC | 11.5% | 17.9% |
| Selected WACC | 14.7% | |
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 EMAMIPAP.NS:
cost_of_equity (20.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.33) + 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.