The WACC of Zuari Agro Chemicals Ltd (ZUARI.NS) is 14.9%.
| Range | Selected | |
| Cost of equity | 21.60% - 26.10% | 23.85% |
| Tax rate | 23.10% - 27.00% | 25.05% |
| Cost of debt | 8.80% - 10.50% | 9.65% |
| WACC | 13.6% - 16.2% | 14.9% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.78 | 1.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 21.60% | 26.10% |
| Tax rate | 23.10% | 27.00% |
| Debt/Equity ratio | 1.17 | 1.17 |
| Cost of debt | 8.80% | 10.50% |
| After-tax WACC | 13.6% | 16.2% |
| Selected WACC | 14.9% | |
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 ZUARI.NS:
cost_of_equity (23.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.78) + 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.