The WACC of Shree Cement Ltd (SHREECEM.NS) is 14.7%.
Range | Selected | |
Cost of equity | 13.30% - 16.30% | 14.80% |
Tax rate | 19.10% - 19.60% | 19.35% |
Cost of debt | 7.90% - 9.30% | 8.60% |
WACC | 13.2% - 16.1% | 14.7% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.78 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.30% | 16.30% |
Tax rate | 19.10% | 19.60% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 7.90% | 9.30% |
After-tax WACC | 13.2% | 16.1% |
Selected WACC | 14.7% | |
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 SHREECEM.NS:
cost_of_equity (14.80%) = 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.