The WACC of IFB Agro Industries Ltd (IFBAGRO.NS) is 14.6%.
Range | Selected | |
Cost of equity | 13.5% - 16.1% | 14.8% |
Tax rate | 22.1% - 23.8% | 22.95% |
Cost of debt | 7.5% - 12.6% | 10.05% |
WACC | 13.3% - 16.0% | 14.6% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.8 | 0.89 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.5% | 16.1% |
Tax rate | 22.1% | 23.8% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 7.5% | 12.6% |
After-tax WACC | 13.3% | 16.0% |
Selected WACC | 14.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
IFBAGRO.NS | IFB Agro Industries Ltd | 0.02 | 1.34 | 1.32 |
507155.BO | Jagatjit Industries Ltd | 0.3 | 0.87 | 0.71 |
600365.SS | Tonghua Grape Wine Co Ltd | 0.18 | 0.74 | 0.65 |
AVG.AX | Australian Vintage Ltd | 4.53 | 0.35 | 0.08 |
GLOBUSSPR.NS | Globus Spirits Ltd | 0.1 | 2 | 1.85 |
MCDOWELL-N.NS | United Spirits Ltd | 0 | 0.77 | 0.77 |
PIONDIST.NS | Pioneer Distilleries Ltd | 1.97 | 1.13 | 0.44 |
RADICO.NS | Radico Khaitan Ltd | 0.02 | 0.9 | 0.89 |
RKDL.NS | Ravi Kumar Distilleries Ltd | 0.56 | 0.73 | 0.51 |
TI.NS | Tilaknagar Industries Ltd | 0.02 | 1.86 | 1.84 |
Low | High | |
Unlevered beta | 0.68 | 0.82 |
Relevered beta | 0.7 | 0.84 |
Adjusted relevered beta | 0.8 | 0.89 |
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 IFBAGRO.NS:
cost_of_equity (14.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.8) + 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.