GGRM.JK WACC - Weighted Average Cost of Capital

The WACC of Gudang Garam Tbk PT (GGRM.JK) is 12.2%.

The Cost of Equity of Gudang Garam Tbk PT (GGRM.JK) is 14.95%.

The Cost of Debt of Gudang Garam Tbk PT (GGRM.JK) is 5.50%.

	Range	Selected
Cost of equity	13.70% - 16.20%	14.95%
Tax rate	23.50% - 26.30%	24.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	11.0% - 13.4%	12.2%

WACC

GGRM.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.9	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.70%	16.20%

Tax rate	23.50%	26.30%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.00%	7.00%

After-tax WACC	11.0%	13.4%


Selected WACC	12.2%

GGRM.JK'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 GGRM.JK:

cost_of_equity (14.95%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.9) + 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.