The WACC of IL&FS Transportation Networks Ltd (IL&FSTRANS.NS) is 14.0%.
| Range | Selected | |
| Cost of equity | 419.80% - 861.00% | 640.40% |
| Tax rate | 30.00% - 31.80% | 30.90% |
| Cost of debt | 13.50% - 20.00% | 16.75% |
| WACC | 11.0% - 17.0% | 14.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 59.66 | 107.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 419.80% | 861.00% |
| Tax rate | 30.00% | 31.80% |
| Debt/Equity ratio | 253.04 | 253.04 |
| Cost of debt | 13.50% | 20.00% |
| After-tax WACC | 11.0% | 17.0% |
| Selected WACC | 14.0% | |
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 IL&FSTRANS.NS:
cost_of_equity (640.40%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (59.66) + 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.