The WACC of Indofarma Tbk PT (INAF.JK) is 8.2%.
Range | Selected | |
Cost of equity | 14.4% - 16.9% | 15.65% |
Tax rate | 22.0% - 23.2% | 22.6% |
Cost of debt | 4.0% - 7.2% | 5.6% |
WACC | 7.0% - 9.4% | 8.2% |
Category | Low | High |
Long-term bond rate | 6.6% | 7.1% |
Equity market risk premium | 7.9% | 8.9% |
Adjusted beta | 0.98 | 1.04 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 14.4% | 16.9% |
Tax rate | 22.0% | 23.2% |
Debt/Equity ratio | 1.89 | 1.89 |
Cost of debt | 4.0% | 7.2% |
After-tax WACC | 7.0% | 9.4% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
INAF.JK | Indofarma Tbk PT | 1.89 | 4.74 | 1.91 |
002118.SZ | Jilin Zixin Pharmaceutical Industrial Co Ltd | 13.67 | 1.11 | 0.1 |
053030.KQ | Binex Co Ltd | 0.12 | 0.37 | 0.34 |
058820.KQ | CMG Pharmaceutical Co Ltd | 0.28 | 0.5 | 0.41 |
603079.SS | Zhejiang Shengda Bio-Pharm Co Ltd | 0.11 | 0.6 | 0.55 |
DVLA.JK | Darya-Varia Laboratoria Tbk PT | 0 | 0.45 | 0.45 |
KAEF.JK | Kimia Farma Tbk PT | 2.18 | 1.38 | 0.51 |
MERK.JK | Merck Tbk PT | 0.02 | 0.42 | 0.42 |
PEHA.JK | Phapros Tbk PT | 2.76 | 0.92 | 0.29 |
PYFA.JK | Pyridam Farma Tbk PT | 1.47 | 1.5 | 0.7 |
SOHO.JK | SOHO Global Health PT | 0 | 0.37 | 0.37 |
Low | High | |
Unlevered beta | 0.41 | 0.45 |
Relevered beta | 0.97 | 1.06 |
Adjusted relevered beta | 0.98 | 1.04 |
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 INAF.JK:
cost_of_equity (15.65%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.98) + 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.