The WACC of Lumax Industries Ltd (LUMAXIND.NS) is 15.7%.
Range | Selected | |
Cost of equity | 16.8% - 20.1% | 18.45% |
Tax rate | 27.3% - 30.5% | 28.9% |
Cost of debt | 7.2% - 9.1% | 8.15% |
WACC | 14.3% - 17.1% | 15.7% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1.19 | 1.31 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 16.8% | 20.1% |
Tax rate | 27.3% | 30.5% |
Debt/Equity ratio | 0.27 | 0.27 |
Cost of debt | 7.2% | 9.1% |
After-tax WACC | 14.3% | 17.1% |
Selected WACC | 15.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LUMAXIND.NS | Lumax Industries Ltd | 0.27 | 1.11 | 0.93 |
BANCOINDIA.NS | Banco Products (India) Ltd | 0.05 | 1.71 | 1.65 |
FIEMIND.NS | Fiem Industries Ltd | 0.01 | 1.21 | 1.2 |
GABRIEL.NS | Gabriel India Ltd | 0.01 | 1.99 | 1.97 |
JAYBARMARU.NS | Jay Bharat Maruti Ltd | 0.52 | 1.16 | 0.86 |
JTEKTINDIA.NS | JTEKT India Ltd | 0.03 | 1.31 | 1.28 |
RICOAUTO.NS | Rico Auto Industries Ltd | 0.72 | 1.77 | 1.18 |
SANDHAR.NS | Sandhar Technologies Ltd | 0.27 | 1.51 | 1.27 |
SHRIPISTON.NS | Shriram Pistons & Rings Ltd | 0.03 | 0.92 | 0.9 |
SSWL.NS | Steel Strips Wheels Ltd | 0.27 | 0.88 | 0.74 |
Low | High | |
Unlevered beta | 1.08 | 1.23 |
Relevered beta | 1.28 | 1.46 |
Adjusted relevered beta | 1.19 | 1.31 |
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 LUMAXIND.NS:
cost_of_equity (18.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.19) + 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.