SIDO.JK WACC - Weighted Average Cost of Capital

The WACC of Industri Jamu dan Farmasi Sido Muncul Tbk PT (SIDO.JK) is 12.0%.

The Cost of Equity of Industri Jamu dan Farmasi Sido Muncul Tbk PT (SIDO.JK) is 12.05%.

The Cost of Debt of Industri Jamu dan Farmasi Sido Muncul Tbk PT (SIDO.JK) is 5.50%.

	Range	Selected
Cost of equity	10.70% - 13.40%	12.05%
Tax rate	22.10% - 22.20%	22.15%
Cost of debt	4.00% - 7.00%	5.50%
WACC	10.7% - 13.4%	12.0%

WACC

SIDO.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.52	0.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.70%	13.40%

Tax rate	22.10%	22.20%
Debt/Equity ratio	0	0
Cost of debt	4.00%	7.00%

After-tax WACC	10.7%	13.4%


Selected WACC	12.0%

SIDO.JK's CAPM model and how its cost of Equity is calculated

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 SIDO.JK:

cost_of_equity (12.05%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.52) + 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.