The WACC of RSWM Ltd (RSWM.NS) is 12.4%.
| Range | Selected | |
| Cost of equity | 20.10% - 23.50% | 21.80% |
| Tax rate | 18.80% - 21.60% | 20.20% |
| Cost of debt | 7.40% - 12.10% | 9.75% |
| WACC | 10.7% - 14.1% | 12.4% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.59 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.10% | 23.50% |
| Tax rate | 18.80% | 21.60% |
| Debt/Equity ratio | 2.02 | 2.02 |
| Cost of debt | 7.40% | 12.10% |
| After-tax WACC | 10.7% | 14.1% |
| Selected WACC | 12.4% | |
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 RSWM.NS:
cost_of_equity (21.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.59) + 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.