The WACC of Pradip Overseas Ltd (PRADIP.NS) is 4.3%.
| Range | Selected | |
| Cost of equity | 98.20% - 170.20% | 134.20% |
| Tax rate | 30.00% - 31.80% | 30.90% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.2% - 5.4% | 4.3% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 13.1 | 20.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 98.20% | 170.20% |
| Tax rate | 30.00% | 31.80% |
| Debt/Equity ratio | 257.36 | 257.36 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.2% | 5.4% |
| Selected WACC | 4.3% | |
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 PRADIP.NS:
cost_of_equity (134.20%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (13.1) + 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.