The WACC of HSIL Ltd (HSIL.NS) is 13.4%.
| Range | Selected | |
| Cost of equity | 16.50% - 19.90% | 18.20% |
| Tax rate | 30.80% - 33.00% | 31.90% |
| Cost of debt | 5.70% - 10.30% | 8.00% |
| WACC | 11.8% - 15.0% | 13.4% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 1.3 | 1.43 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.50% | 19.90% |
| Tax rate | 30.80% | 33.00% |
| Debt/Equity ratio | 0.6 | 0.6 |
| Cost of debt | 5.70% | 10.30% |
| After-tax WACC | 11.8% | 15.0% |
| Selected WACC | 13.4% | |
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 HSIL.NS:
cost_of_equity (18.20%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (1.3) + 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.