The WACC of Mahindra CIE Automotive Ltd (MAHINDCIE.NS) is 15.5%.
| Range | Selected | |
| Cost of equity | 14.30% - 17.90% | 16.10% |
| Tax rate | 37.70% - 41.70% | 39.70% |
| Cost of debt | 4.00% - 7.90% | 5.95% |
| WACC | 13.8% - 17.3% | 15.5% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.81 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.30% | 17.90% |
| Tax rate | 37.70% | 41.70% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.00% | 7.90% |
| After-tax WACC | 13.8% | 17.3% |
| Selected WACC | 15.5% | |
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 MAHINDCIE.NS:
cost_of_equity (16.10%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (0.81) + 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.