The WACC of Setubandhan Infrastructure Ltd (SETUINFRA.NS) is 12.3%.
| Range | Selected | |
| Cost of equity | 52.10% - 76.00% | 64.05% |
| Tax rate | 5.60% - 38.50% | 22.05% |
| Cost of debt | 8.00% - 10.00% | 9.00% |
| WACC | 11.8% - 12.7% | 12.3% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 5.45 | 7.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 52.10% | 76.00% |
| Tax rate | 5.60% | 38.50% |
| Debt/Equity ratio | 9.61 | 9.61 |
| Cost of debt | 8.00% | 10.00% |
| After-tax WACC | 11.8% | 12.7% |
| Selected WACC | 12.3% | |
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 SETUINFRA.NS:
cost_of_equity (64.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (5.45) + 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.