The WACC of Shree Cement Ltd (SHREECEM.NS) is 14.7%.
Range | Selected | |
Cost of equity | 13.3% - 16.3% | 14.8% |
Tax rate | 17.5% - 19.1% | 18.3% |
Cost of debt | 7.8% - 8.8% | 8.3% |
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 | 13.3% | 16.3% |
Tax rate | 17.5% | 19.1% |
Debt/Equity ratio | 0.01 | 0.01 |
Cost of debt | 7.8% | 8.8% |
After-tax WACC | 13.2% | 16.1% |
Selected WACC | 14.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SHREECEM.NS | Shree Cement Ltd | 0.01 | 0.85 | 0.84 |
ACC.NS | ACC Ltd | 0.01 | 0.86 | 0.85 |
AMBUJACEM.NS | Ambuja Cements Ltd | 0.01 | 0.95 | 0.95 |
BINANIIND.NS | Binani Industries Ltd | 4.53 | 1.21 | 0.26 |
DALBHARAT.NS | Dalmia Bharat Ltd | 0.14 | 1.17 | 1.05 |
INDIACEM.NS | India Cements Ltd | 0.24 | 0.69 | 0.58 |
JKCEMENT.NS | J K Cement Ltd | 0.12 | 1.1 | 1 |
KESORAMIND.NS | Kesoram Industries Ltd | 1.08 | 0.36 | 0.19 |
ORIENTCEM.NS | Orient Cement Ltd | 0.01 | -0.28 | -0.28 |
RAMCOCEM.NS | Ramco Cements Ltd | 0.18 | 0.83 | 0.72 |
Low | High | |
Unlevered beta | 0.66 | 0.84 |
Relevered beta | 0.67 | 0.85 |
Adjusted relevered beta | 0.78 | 0.9 |
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.