The WACC of Wabco India Ltd (WABCOINDIA.NS) is 15.0%.
Range | Selected | |
Cost of equity | 13.7% - 16.4% | 15.05% |
Tax rate | 28.9% - 29.9% | 29.4% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 13.7% - 16.4% | 15.0% |
Category | Low | High |
Long-term bond rate | 7.5% | 8.0% |
Equity market risk premium | 6.9% | 7.9% |
Adjusted beta | 0.89 | 0.99 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.7% | 16.4% |
Tax rate | 28.9% | 29.9% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 13.7% | 16.4% |
Selected WACC | 15.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
WABCOINDIA.NS | Wabco India Ltd | 0 | 0.22 | 0.22 |
ASAHIINDIA.NS | Asahi India Glass Ltd | 0.09 | 0.95 | 0.89 |
FMGOETZE.NS | Federal-Mogul Goetze (India) Ltd | 0 | 0.73 | 0.72 |
JAMNAAUTO.NS | Jamna Auto Industries Ltd | 0.08 | 1.6 | 1.52 |
LUMAXIND.NS | Lumax Industries Ltd | 0.24 | 1.02 | 0.87 |
MINDACORP.NS | Minda Corporation Ltd | 0.04 | 1.1 | 1.06 |
RICOAUTO.NS | Rico Auto Industries Ltd | 0.67 | 1.91 | 1.29 |
SUNDRMFAST.NS | Sundram Fasteners Ltd | 0.03 | 0.65 | 0.64 |
SUPRAJIT.NS | Suprajit Engineering Ltd | 0.13 | 1.4 | 1.29 |
WHEELS.NS | Wheels India Ltd | 0.4 | 1.35 | 1.05 |
Low | High | |
Unlevered beta | 0.88 | 1.06 |
Relevered beta | 0.84 | 0.99 |
Adjusted relevered beta | 0.89 | 0.99 |
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 WABCOINDIA.NS:
cost_of_equity (15.05%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.89) + 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.