GEL.MI WACC - Weighted Average Cost of Capital

The WACC of Gel SpA (GEL.MI) is 7.4%.

The Cost of Equity of Gel SpA (GEL.MI) is 9.80%.

The Cost of Debt of Gel SpA (GEL.MI) is 4.25%.

	Range	Selected
Cost of equity	8.50% - 11.10%	9.80%
Tax rate	24.00% - 24.00%	24.00%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.5% - 8.3%	7.4%

WACC

GEL.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.58	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	11.10%

Tax rate	24.00%	24.00%
Debt/Equity ratio	0.56	0.56
Cost of debt	4.00%	4.50%

After-tax WACC	6.5%	8.3%


Selected WACC	7.4%

GEL.MI's CAPM model and how its cost of Equity is calculated

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 GEL.MI:

cost_of_equity (9.80%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.58) + 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.