GGRM.JK WACC - Weighted Average Cost of Capital

The WACC of Gudang Garam Tbk PT (GGRM.JK) is 9.6%.

The Cost of Equity of Gudang Garam Tbk PT (GGRM.JK) is 12.20%.

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

	Range	Selected
Cost of equity	10.90% - 13.50%	12.20%
Tax rate	22.80% - 23.40%	23.10%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.4% - 10.8%	9.6%

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	0.55	0.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	13.50%

Tax rate	22.80%	23.40%
Debt/Equity ratio	0.49	0.49
Cost of debt	4.00%	7.00%

After-tax WACC	8.4%	10.8%


Selected WACC	9.6%

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 (12.20%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.55) + 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.