PUNJABCHEM.NS WACC - Weighted Average Cost of Capital

The WACC of Punjab Chemicals and Crop Protection Ltd (PUNJABCHEM.NS) is 14.0%.

The Cost of Equity of Punjab Chemicals and Crop Protection Ltd (PUNJABCHEM.NS) is 14.65%.

The Cost of Debt of Punjab Chemicals and Crop Protection Ltd (PUNJABCHEM.NS) is 12.65%.

	Range	Selected
Cost of equity	13.40% - 15.90%	14.65%
Tax rate	26.10% - 26.90%	26.50%
Cost of debt	7.90% - 17.40%	12.65%
WACC	12.5% - 15.6%	14.0%

WACC

PUNJABCHEM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.78	0.87

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.40%	15.90%

Tax rate	26.10%	26.90%
Debt/Equity ratio	0.13	0.13
Cost of debt	7.90%	17.40%

After-tax WACC	12.5%	15.6%


Selected WACC	14.0%

PUNJABCHEM.NS's CAPM model and how its cost of Equity is calculated

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 PUNJABCHEM.NS:

cost_of_equity (14.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.78) + 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.