WACC in Meroshare and Your Real Break-Even Price

Open a holding in Meroshare and you will see a figure called WACC — the weighted average cost of each share you hold. It is one of the most useful numbers in your account, and one of the most misread. It is not the price you clicked when you bought, and it is not the price you need to sell at to break even. This guide explains what goes into it, works through an example, and shows how to get from WACC to a real break-even price.

What WACC is

WACC is the average cost per share of everything you have bought, including the costs of buying. Each purchase adds its share amount plus the broker commission, the SEBON fee and the DP charge; WACC is that total divided by the number of shares. Two things follow from this:

• Your WACC is almost always a little higher than the plain average of the prices you paid, because the buying fees are inside it.
• When you buy more at a different price, WACC moves towards the new price in proportion to how many shares you add — that is the "weighted" part.

WACC matters for tax too: when you sell at a profit, the gain on which capital gains tax is withheld is worked out against it. That is why it is worth keeping your purchase records in Meroshare complete and correct.

A worked example with two purchases

Say you buy a share twice:

1. 100 shares at Rs 500. Rs 50,000 + Rs 180 commission + Rs 7.50 SEBON fee + Rs 25 DP charge = Rs 50,212.50.
2. A few weeks later, 50 more at Rs 450. Rs 22,500 + Rs 81 commission + Rs 3.38 SEBON fee + Rs 25 DP charge = Rs 22,609.38.

Altogether you have paid Rs 72,821.88 for 150 shares, so your WACC is Rs 72,821.88 ÷ 150 = Rs 485.48.

Compare that with the plain average of the prices: (100 × 500 + 50 × 450) ÷ 150 = Rs 483.33. The Rs 2.15 difference per share is the buying fees. Small per share, but on 150 shares it is the Rs 321.88 you paid in fees.

What changes WACC — and what doesn't

• Buying more changes it: the new purchase, with its fees, is averaged in.
• Selling some shares does not. The shares you keep still cost what they cost; WACC is the average cost per share, and a sale removes shares at that average.
• Bonus and right shares change it once they are credited. Bonus shares arrive at little cost to you, so your WACC per share falls — which is right, because the market price adjusts down for the bonus too. Right shares come in at the price you paid for them, usually Rs 100.
• Cash dividends do not change WACC. They are income, paid to your bank account.

From WACC to your real break-even price

WACC covers the cost of buying. Selling has its own commission, SEBON fee and DP charge, so to get all your money back the selling price has to sit a little above WACC. For the 150 shares above, the price at which the sale returns the full Rs 72,821.88 is about Rs 487.33 — Rs 1.85 above WACC.

The rough rule: on holdings worth Rs 50,000 or more, your break-even selling price is about 0.4% above your WACC. On small holdings the flat DP charge pushes it higher. For the full fee tables, see what a NEPSE trade really costs.

Why the distinction matters

Suppose the market price is Rs 486 and your WACC is Rs 485.48. Meroshare shows a small gain, so it looks like you are in profit. But sell at Rs 486 and, after the selling fees, you receive less than you paid in total. The holding only breaks even above about Rs 487.33. For someone who trades often around small moves, that gap is the whole difference between a gain and a loss.

It also changes how to think about averaging down. Buying more at a lower price lowers your WACC, but every purchase adds a DP charge and commission, and every extra share is more money in a company that has already fallen. Averaging down is a decision about the company, not just about the number.

How NepseIQ shows it

My Stocks keeps a ledger of your purchases, sales, bonus shares, right shares and dividends, and works out WACC the same way Meroshare does, fees included. For each holding it shows the break-even price after selling costs, and whether the current price is above or below it. If your fees differ from the published schedule — a different DP charge, say — enter the total from your contract note and the figures follow.

WACC is what you paid per share, fees included. Your break-even is a little higher, because selling costs money too. Know both before you decide whether a holding is really in profit.