Friday, 17 January 2020

Cost of Equity for Indian Companies by Sector Jan 2020 (based on Prof. Damodaran's data set)

This is a descriptive article based on the data set provided Prof. Damodaran on this website http://pages.stern.nyu.edu/~adamodar/. The objective is to provide a reference point for cost of equity for Indian companies specially for retail investors. It is already known that cost of equity (using CAPM model) becomes a critical input to evaluate risk from an equity investor stand point of view in corporate finance and valuation. Given below is the link to the spreadsheet containing the cost of equity for Indian companies by sector.
 
https://drive.google.com/open?id=1pSH_ElsNh_psnwHn3N9wwbiwsbPjCXwn

The rest of this article is devoted to describing some of the trends in cost of equity for Indian companies.

For the market as a whole there is not much of a difference in terms of cost of equity between 2019 and 2020. The overall cost of equity for the market as a whole as of Jan 2020 is 10.16%  as against 10.21% of 2019.

















Advertising, electronics, oil/gas and dining industry are among the industries with highest cost of equity as shown in the image below.


Broadcasting, beverages and real estate services are among the industries with lowest cost of equity.


In terms of percent increase in the cost of equity advertising, software (internet) and retail (building supply) industries are at the top. The percentages indicated in the figure below represent the percent change when compared to 2019.


Beverages, trucking and retail are among the industries that have shown a decline in the cost of equity when compared to 2019.


Investors are advised to use their discretion in making their investment decisions.

No comments:

Post a Comment

your comments are welcome!