The WACC of Rolta India Ltd (ROLTA.NS) is 11.0%.
| Range | Selected | |
| Cost of equity | 1,601.10% - 1,968.80% | 1,784.95% |
| Tax rate | 2.60% - 7.00% | 4.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.4% - 11.5% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 191.85 | 210.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 1,601.10% | 1,968.80% |
| Tax rate | 2.60% | 7.00% |
| Debt/Equity ratio | 285.51 | 285.51 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.4% | 11.5% |
| Selected WACC | 11.0% | |
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 ROLTA.NS:
cost_of_equity (1,784.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (191.85) + 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.