How to Calculate WACC for a NEPSE Portfolio
Updated · 5 min read
Weighted average cost of capital per holding is the number that decides your real profit. Here is how bonus shares, rights and repeat purchases change it.
WACC, in the NEPSE retail sense, is the weighted average cost of the shares you hold: total money spent acquiring a position divided by the number of shares that position now contains. It is the number your profit is measured against, and it is the number most investors get wrong, because Nepali corporate actions keep changing the share count without changing the money spent.
The base case
Buy 100 shares at Rs 500 and later 50 at Rs 620. You have spent 50,000 plus 31,000 for 150 shares, so the weighted average cost is Rs 540 per share. Note that this is not the average of 500 and 620 — the larger lot pulls the average toward its price.
Include the costs. Commission, SEBON fee and DP charge are part of what the shares cost you, so a strict cost basis adds them to the numerator. Ignoring them understates your breakeven by a few rupees per share on small lots.
Bonus shares
A bonus issue adds shares without any new money. The denominator grows, the numerator does not, so WACC falls. A holding of 150 shares at Rs 540 that receives a 10% bonus becomes 165 shares at roughly Rs 491.
This is why a position can show a paper loss against the market price and still be profitable: the cost that matters is the post-bonus average, not the price on the contract note.
Rights shares
A rights issue adds shares at a stated price, usually Rs 100. Both the numerator and the denominator move. Taking 50 rights shares at Rs 100 on the 165-share holding above gives 215 shares for 81,000 plus 5,000, an average near Rs 400.
Declining the rights changes nothing about your cost — but it does dilute your share of the company, which is a separate question from your breakeven.
Selling and realised profit
When you sell part of a holding, the shares sold leave at the weighted average cost, not at the price of any particular purchase. Selling 50 of the 215 shares above at Rs 600 realises a gain against Rs 400, not against the original Rs 500 lot, and the remaining 165 shares keep the same Rs 400 average.
This ordering matters for tax: the realised gain is what capital gains tax applies to.
Why do this in software
- Every corporate action has to be replayed in date order. One bonus applied out of sequence changes every subsequent average.
- Fees belong in the cost basis and are easy to drop from a spreadsheet.
- Partial sales must not disturb the remaining average, which manual sheets frequently get wrong.
The NepsezAI portfolio tracker replays the full transaction ledger — buys, sells, bonus, rights and IPO allotments — to derive the current quantity, average cost and realised profit, so the number updates itself as you add transactions.
NepsezAI provides information and analysis only. Nothing here is registered investment advice or a recommendation to buy or sell any security.