The WACC of Mercator Ltd (MERCATOR.NS) is 5.8%.
| Range | Selected | |
| Cost of equity | 3.10% - 166.40% | 84.75% |
| Tax rate | 3.60% - 5.20% | 4.40% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.8% - 6.7% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | -0.64 | 16.87 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 3.10% | 166.40% |
| Tax rate | 3.60% | 5.20% |
| Debt/Equity ratio | 81.17 | 81.17 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.8% | 6.7% |
| Selected WACC | 5.8% | |
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 MERCATOR.NS:
cost_of_equity (84.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (-0.64) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.