The WACC of Swelect Energy Systems Ltd (SWELECTES.NS) is 16.8%.
Range | Selected | |
Cost of equity | 18.80% - 23.20% | 21.00% |
Tax rate | 7.40% - 9.70% | 8.55% |
Cost of debt | 10.20% - 12.10% | 11.15% |
WACC | 15.2% - 18.4% | 16.8% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1.44 | 1.64 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 18.80% | 23.20% |
Tax rate | 7.40% | 9.70% |
Debt/Equity ratio | 0.64 | 0.64 |
Cost of debt | 10.20% | 12.10% |
After-tax WACC | 15.2% | 18.4% |
Selected WACC | 16.8% | |
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 SWELECTES.NS:
cost_of_equity (21.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.44) + 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.