The WACC of United Spirits Ltd (MCDOWELL-N.NS) is 15.4%.
| Range | Selected | |
| Cost of equity | 13.30% - 17.60% | 15.45% |
| Tax rate | 21.70% - 24.40% | 23.05% |
| Cost of debt | 7.80% - 8.70% | 8.25% |
| WACC | 13.3% - 17.6% | 15.4% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.75 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.30% | 17.60% |
| Tax rate | 21.70% | 24.40% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 7.80% | 8.70% |
| After-tax WACC | 13.3% | 17.6% |
| Selected WACC | 15.4% | |
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 MCDOWELL-N.NS:
cost_of_equity (15.45%) = risk_free_rate (7.35%) + equity_risk_premium (8.80%) * adjusted_beta (0.75) + 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.