The WACC of Power Mech Projects Ltd (POWERMECH.NS) is 16.7%.
Range | Selected | |
Cost of equity | 13.7% - 20.2% | 16.95% |
Tax rate | 25.6% - 27.3% | 26.45% |
Cost of debt | 7.9% - 16.7% | 12.3% |
WACC | 13.4% - 19.9% | 16.7% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.82 | 1.33 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.7% | 20.2% |
Tax rate | 25.6% | 27.3% |
Debt/Equity ratio | 0.04 | 0.04 |
Cost of debt | 7.9% | 16.7% |
After-tax WACC | 13.4% | 19.9% |
Selected WACC | 16.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
POWERMECH.NS | Power Mech Projects Ltd | 0.04 | 1.97 | 1.92 |
AHLUCONT.NS | Ahluwalia Contracts (India) Ltd | 0.01 | 1.49 | 1.48 |
GEPIL.NS | Ge Power India Ltd | 0.15 | 1.59 | 1.43 |
INDIANHUME.NS | Indian Hume Pipe Company Ltd | 0.19 | 1.88 | 1.65 |
ITDCEM.NS | ITD Cementation India Ltd | 0.06 | 0.39 | 0.37 |
JPINFRATEC.NS | Jaypee Infratech Ltd | 54.3 | 1.87 | 0.05 |
PATELENG.NS | Patel Engineering Ltd | 0.59 | 1.37 | 0.95 |
PSPPROJECT.NS | PSP Projects Ltd | 0.08 | 0.39 | 0.37 |
SPMLINFRA.NS | SPML Infra Ltd | 0.28 | 0.44 | 0.37 |
WELENT.NS | Welspun Enterprises Ltd | 0.11 | 1.67 | 1.54 |
Low | High | |
Unlevered beta | 0.72 | 1.45 |
Relevered beta | 0.73 | 1.49 |
Adjusted relevered beta | 0.82 | 1.33 |
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 POWERMECH.NS:
cost_of_equity (16.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.82) + 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.