The WACC of Spicejet Ltd (SPICEJET.NS) is 9.3%.
| Range | Selected | |
| Cost of equity | 23.80% - 30.20% | 27.00% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 4.00% - 9.30% | 6.65% |
| WACC | 7.1% - 11.4% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 2.02 | 2.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 23.80% | 30.20% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 3.84 | 3.84 |
| Cost of debt | 4.00% | 9.30% |
| After-tax WACC | 7.1% | 11.4% |
| Selected WACC | 9.3% | |
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 SPICEJET.NS:
cost_of_equity (27.00%) = risk_free_rate (7.35%) + equity_risk_premium (8.80%) * adjusted_beta (2.02) + 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.