The WACC of Vishwaraj Sugar Industries Ltd (VISHWARAJ.NS) is 9.0%.
| Range | Selected | |
| Cost of equity | 18.40% - 22.50% | 20.45% |
| Tax rate | 30.30% - 33.30% | 31.80% |
| Cost of debt | 7.00% - 8.50% | 7.75% |
| WACC | 8.2% - 9.9% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.39 | 1.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.40% | 22.50% |
| Tax rate | 30.30% | 33.30% |
| Debt/Equity ratio | 3.03 | 3.03 |
| Cost of debt | 7.00% | 8.50% |
| After-tax WACC | 8.2% | 9.9% |
| Selected WACC | 9.0% | |
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 VISHWARAJ.NS:
cost_of_equity (20.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.39) + 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.