The WACC of ICICI Securities Ltd (ISEC.NS) is 14.3%.
Range | Selected | |
Cost of equity | 15.7% - 19.2% | 17.45% |
Tax rate | 25.4% - 25.5% | 25.45% |
Cost of debt | 10.0% - 14.2% | 12.1% |
WACC | 12.7% - 16.0% | 14.3% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1.06 | 1.22 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 15.7% | 19.2% |
Tax rate | 25.4% | 25.5% |
Debt/Equity ratio | 0.58 | 0.58 |
Cost of debt | 10.0% | 14.2% |
After-tax WACC | 12.7% | 16.0% |
Selected WACC | 14.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ISEC.NS | ICICI Securities Ltd | 0.58 | 0.87 | 0.6 |
5PAISA.NS | 5Paisa Capital Ltd | 0.28 | 1.31 | 1.08 |
CENTRUM.NS | Centrum Capital Ltd | 2.89 | 1.16 | 0.37 |
DOLAT.NS | Dolat Investments Ltd | 0.08 | 0.92 | 0.87 |
GEOJITFSL.NS | Geojit Financial Services Ltd | 0.07 | 1.99 | 1.9 |
IIFLSEC.NS | IIFL Securities Ltd | 0.11 | 1.13 | 1.05 |
JMFINANCIL.NS | JM Financial Ltd | 1.01 | 2.02 | 1.15 |
PNBGILTS.NS | Pnb Gilts Ltd | 13.11 | 1.51 | 0.14 |
RELIGARE.NS | Religare Enterprises Ltd | 0.06 | 0.63 | 0.6 |
THEINVEST.NS | Investment Trust of India Ltd | 0.49 | 1.18 | 0.87 |
Low | High | |
Unlevered beta | 0.76 | 0.94 |
Relevered beta | 1.09 | 1.33 |
Adjusted relevered beta | 1.06 | 1.22 |
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 ISEC.NS:
cost_of_equity (17.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.06) + 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.