The WACC of Indus Gas Ltd (INDI.L) is 8.0%.
| Range | Selected | |
| Cost of equity | 80.00% - 181.50% | 130.75% |
| Tax rate | 31.30% - 39.50% | 35.40% |
| Cost of debt | 4.00% - 15.80% | 9.90% |
| WACC | 3.9% - 12.1% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 12.7 | 25.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 80.00% | 181.50% |
| Tax rate | 31.30% | 39.50% |
| Debt/Equity ratio | 67.18 | 67.18 |
| Cost of debt | 4.00% | 15.80% |
| After-tax WACC | 3.9% | 12.1% |
| Selected WACC | 8.0% | |
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 INDI.L:
cost_of_equity (130.75%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (12.7) + 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.