The WACC of Sreeleathers Ltd (SREEL.NS) is 12.0%.
| Range | Selected | |
| Cost of equity | 10.80% - 13.20% | 12.00% |
| Tax rate | 26.30% - 26.50% | 26.40% |
| Cost of debt | 5.20% - 7.50% | 6.35% |
| WACC | 10.8% - 13.2% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.48 | 0.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.80% | 13.20% |
| Tax rate | 26.30% | 26.50% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.20% | 7.50% |
| After-tax WACC | 10.8% | 13.2% |
| Selected WACC | 12.0% | |
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 SREEL.NS:
cost_of_equity (12.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.48) + 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.