The WACC of Srei Infrastructure Finance Ltd (SREINFRA.NS) is 4.8%.
| Range | Selected | |
| Cost of equity | 38.20% - 111.10% | 74.65% |
| Tax rate | 2.60% - 12.60% | 7.60% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 4.7% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 3.77 | 11.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 38.20% | 111.10% |
| Tax rate | 2.60% | 12.60% |
| Debt/Equity ratio | 305.9 | 305.9 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 4.7% |
| Selected WACC | 4.8% | |
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 SREINFRA.NS:
cost_of_equity (74.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (3.77) + 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.