The WACC of Yes Bank Ltd (YESBANK.NS) is 12.2%.
Range | Selected | |
Cost of equity | 20.4% - 23.5% | 21.95% |
Tax rate | 24.7% - 25.3% | 25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 11.5% - 13.0% | 12.2% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 1.63 | 1.68 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 20.4% | 23.5% |
Tax rate | 24.7% | 25.3% |
Debt/Equity ratio | 1.15 | 1.15 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 11.5% | 13.0% |
Selected WACC | 12.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
YESBANK.NS | Yes Bank Ltd | 1.15 | 1.31 | 0.7 |
CENTRALBK.NS | Central Bank of India Ltd | 0.68 | 1.68 | 1.11 |
IDBI.NS | IDBI Bank Ltd | 0.24 | 1.31 | 1.11 |
IDFCFIRSTB.NS | IDFC First Bank Ltd | 0.8 | 0.87 | 0.54 |
INDIANB.NS | Indian Bank | 0.56 | 1.25 | 0.88 |
IOB.NS | Indian Overseas Bank | 0.63 | 1.44 | 0.98 |
KARURVYSYA.NS | Karur Vysya Bank Ltd | 0.18 | 1.28 | 1.13 |
PSB.NS | Punjab & Sind Bank | 0.73 | 2.08 | 1.35 |
UCOBANK.NS | UCO Bank | 0.77 | 1.65 | 1.05 |
UNIONBANK.NS | Union Bank of India Ltd | 0.32 | 1.29 | 1.04 |
Low | High | |
Unlevered beta | 1.02 | 1.07 |
Relevered beta | 1.94 | 2.01 |
Adjusted relevered beta | 1.63 | 1.68 |
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 YESBANK.NS:
cost_of_equity (21.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.63) + 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.