The WACC of Karma Energy Ltd (KARMAENG.NS) is 13.6%.
Range | Selected | |
Cost of equity | 12.00% - 15.60% | 13.80% |
Tax rate | 7.40% - 11.90% | 9.65% |
Cost of debt | 4.00% - 7.00% | 5.50% |
WACC | 11.8% - 15.4% | 13.6% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.62 | 0.83 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.00% | 15.60% |
Tax rate | 7.40% | 11.90% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 4.00% | 7.00% |
After-tax WACC | 11.8% | 15.4% |
Selected WACC | 13.6% | |
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 KARMAENG.NS:
cost_of_equity (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.62) + 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.