The WACC of Parenteral Drugs (India) Ltd (PDPL.NS) is 12.0%.
Range | Selected | |
Cost of equity | 37.7% - 70.3% | 54% |
Tax rate | 25.6% - 27.1% | 26.35% |
Cost of debt | 7.0% - 16.6% | 11.8% |
WACC | 7.6% - 16.4% | 12.0% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 3.71 | 6.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 37.7% | 70.3% |
Tax rate | 25.6% | 27.1% |
Debt/Equity ratio | 12.4 | 12.4 |
Cost of debt | 7.0% | 16.6% |
After-tax WACC | 7.6% | 16.4% |
Selected WACC | 12.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
PDPL.NS | Parenteral Drugs (India) Ltd | 12.4 | 0.38 | 0.04 |
506919.BO | Makers Laboratories Ltd | 0.15 | 2.07 | 1.86 |
511523.BO | Veerhealth Care Ltd | 0.13 | 0.47 | 0.43 |
524202.BO | Lactose India Ltd | 0.45 | 0.66 | 0.49 |
524506.BO | Coral Laboratories Ltd | 0.01 | 1.24 | 1.23 |
524711.BO | Vista Pharmaceuticals Ltd | 0.12 | 0.54 | 0.5 |
530233.BO | Auro Laboratories Ltd | 0.28 | 0.9 | 0.75 |
538965.BO | Concord Drugs Ltd | 0.49 | 0.52 | 0.39 |
LYKALABS.NS | Lyka Labs Ltd | 0.1 | 1.54 | 1.44 |
VAISHALI.NS | Vaishali Pharma Ltd | 0.1 | 1.83 | 1.71 |
Low | High | |
Unlevered beta | 0.5 | 0.94 |
Relevered beta | 5.04 | 9.52 |
Adjusted relevered beta | 3.71 | 6.71 |
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 PDPL.NS:
cost_of_equity (54.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (3.71) + 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.