The WACC of Premier Ltd (PREMIER.NS) is 8.7%.
| Range | Selected | |
| Cost of equity | 64.30% - 98.40% | 81.35% |
| Tax rate | 0.30% - 3.80% | 2.05% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.9% - 9.5% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 6.91 | 9.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 64.30% | 98.40% |
| Tax rate | 0.30% | 3.80% |
| Debt/Equity ratio | 19.06 | 19.06 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.9% | 9.5% |
| Selected WACC | 8.7% | |
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 PREMIER.NS:
cost_of_equity (81.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (6.91) + 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.