The WACC of Indonesian Tobacco Tbk PT (ITIC.JK) is 10.7%.
Range | Selected | |
Cost of equity | 14.2% - 18.1% | 16.15% |
Tax rate | 26.1% - 26.9% | 26.5% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 9.6% - 11.7% | 10.7% |
Category | Low | High |
Long-term bond rate | 6.6% | 7.1% |
Equity market risk premium | 7.9% | 8.9% |
Adjusted beta | 0.96 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 14.2% | 18.1% |
Tax rate | 26.1% | 26.9% |
Debt/Equity ratio | 0.78 | 0.78 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 9.6% | 11.7% |
Selected WACC | 10.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ITIC.JK | Indonesian Tobacco Tbk PT | 0.78 | 0.39 | 0.24 |
526723.BO | NTC Industries Ltd | 0.17 | 1.26 | 1.12 |
BAT.KL | British American Tobacco (Malaysia) Bhd | 0.44 | 1 | 0.76 |
CLC.VN | Cat Loi JSC | 0.49 | 0.27 | 0.2 |
GGRM.JK | Gudang Garam Tbk PT | 0.52 | 0.8 | 0.57 |
GODFRYPHLP.NS | Godfrey Phillips India Ltd | 0.01 | 1.62 | 1.61 |
GOLDENTOBC.NS | Golden Tobacco Ltd | 0.03 | 0.09 | 0.09 |
HMSP.JK | Hanjaya Mandala Sampoerna Tbk PT | 0.01 | 0.62 | 0.62 |
RMBA.JK | Bentoel International Investama Tbk PT | 0 | 0.87 | 0.87 |
WIIM.JK | Wismilak Inti Makmur Tbk PT | 0.25 | 1.04 | 0.88 |
Low | High | |
Unlevered beta | 0.6 | 0.8 |
Relevered beta | 0.94 | 1.27 |
Adjusted relevered beta | 0.96 | 1.18 |
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 ITIC.JK:
cost_of_equity (16.15%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.96) + 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.