The WACC of Videocon Industries Ltd (VIDEOIND.NS) is 9.4%.
| Range | Selected | |
| Cost of equity | 362.50% - 826.80% | 594.65% |
| Tax rate | 5.60% - 10.70% | 8.15% |
| Cost of debt | 7.00% - 8.40% | 7.70% |
| WACC | 8.0% - 10.7% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 51.39 | 103.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 362.50% | 826.80% |
| Tax rate | 5.60% | 10.70% |
| Debt/Equity ratio | 251.99 | 251.99 |
| Cost of debt | 7.00% | 8.40% |
| After-tax WACC | 8.0% | 10.7% |
| Selected WACC | 9.4% | |
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 VIDEOIND.NS:
cost_of_equity (594.65%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (51.39) + 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.