The WACC of Genpact Ltd (G) is 7.0%.
Range | Selected | |
Cost of equity | 6.3% - 9.0% | 7.65% |
Tax rate | 23.3% - 23.7% | 23.5% |
Cost of debt | 4.0% - 4.6% | 4.3% |
WACC | 5.9% - 8.2% | 7.0% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.53 | 0.74 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.3% | 9.0% |
Tax rate | 23.3% | 23.7% |
Debt/Equity ratio | 0.16 | 0.16 |
Cost of debt | 4.0% | 4.6% |
After-tax WACC | 5.9% | 8.2% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
G | Genpact Ltd | 0.16 | 0.78 | 0.69 |
ALJJ | ALJ Regional Holdings Inc | 1.64 | 0.12 | 0.05 |
CNDT | Conduent Inc | 1.5 | 0.95 | 0.44 |
EEFT | Euronet Worldwide Inc | 0.44 | 0.95 | 0.71 |
EVOP | EVO Payments Inc | 0.39 | 1.11 | 0.85 |
MMS | Maximus Inc | 0.29 | 0.19 | 0.16 |
SRT | Startek Inc | 0.99 | 0.59 | 0.34 |
TTEC | TTEC Holdings Inc | 4.22 | -0.23 | -0.05 |
WEX | WEX Inc | 0.87 | 1.28 | 0.77 |
WU | Western Union Co | 1.06 | 0.21 | 0.12 |
Low | High | |
Unlevered beta | 0.27 | 0.54 |
Relevered beta | 0.3 | 0.61 |
Adjusted relevered beta | 0.53 | 0.74 |
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 Genpact:
cost_of_equity (7.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.53) + 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.