The WACC of MakeMyTrip Ltd (MMYT) is 7.2%.
Range | Selected | |
Cost of equity | 5.8% - 8.7% | 7.25% |
Tax rate | 7.9% - 12.1% | 10% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.8% - 8.6% | 7.2% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.43 | 0.68 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.8% | 8.7% |
Tax rate | 7.9% | 12.1% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.8% | 8.6% |
Selected WACC | 7.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MMYT | MakeMyTrip Ltd | 0.02 | 1.45 | 1.42 |
BZUN | Baozun Inc | 1.57 | 0.5 | 0.21 |
MARK | Remark Holdings Inc | 6.88 | 0.28 | 0.04 |
PBX.V | PowerBand Solutions Inc | 0.06 | -1.75 | -1.65 |
PUBM | PubMatic Inc | 0 | 1.3 | 1.3 |
QUOT | Quotient Technology Inc | 0.13 | 0.68 | 0.61 |
SHRG | Sharing Services Global Corp | 5.77 | 0.3 | 0.05 |
SSTK | Shutterstock Inc | 0.41 | 0.86 | 0.63 |
STMP | Stamps.Com Inc | 0 | 0.46 | 0.46 |
VTEQ | Veriteq Corp | 125.5 | 1.01 | 0.01 |
Low | High | |
Unlevered beta | 0.14 | 0.52 |
Relevered beta | 0.15 | 0.52 |
Adjusted relevered beta | 0.43 | 0.68 |
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 MMYT:
cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.43) + 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.