The WACC of Shiva Cement Ltd (532323.BO) is 9.4%.
| Range | Selected | |
| Cost of equity | 17.20% - 20.40% | 18.80% |
| Tax rate | 23.00% - 25.60% | 24.30% |
| Cost of debt | 7.00% - 9.10% | 8.05% |
| WACC | 8.5% - 10.4% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.24 | 1.35 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.20% | 20.40% |
| Tax rate | 23.00% | 25.60% |
| Debt/Equity ratio | 2.83 | 2.83 |
| Cost of debt | 7.00% | 9.10% |
| After-tax WACC | 8.5% | 10.4% |
| 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 532323.BO:
cost_of_equity (18.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.24) + 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.