The WACC of PBA Infrastructure Ltd (PBAINFRA.NS) is 7.0%.
| Range | Selected | |
| Cost of equity | 62.30% - 89.10% | 75.70% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 5.4% - 8.6% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 6.24 | 8.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 62.30% | 89.10% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 21.75 | 21.75 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 5.4% | 8.6% |
| Selected WACC | 7.0% | |
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 PBAINFRA.NS:
cost_of_equity (75.70%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (6.24) + 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.