The WACC of Manappuram Finance Ltd (MANAPPURAM.NS) is 8.6%.
| Range | Selected | |
| Cost of equity | 13.30% - 18.90% | 16.10% |
| Tax rate | 25.70% - 26.00% | 25.85% |
| Cost of debt | 4.00% - 7.90% | 5.95% |
| WACC | 6.7% - 10.6% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.77 | 1.18 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.30% | 18.90% |
| Tax rate | 25.70% | 26.00% |
| Debt/Equity ratio | 1.77 | 1.77 |
| Cost of debt | 4.00% | 7.90% |
| After-tax WACC | 6.7% | 10.6% |
| Selected WACC | 8.6% | |
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 MANAPPURAM.NS:
cost_of_equity (16.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.77) + 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.