BPCL.NS WACC - Weighted Average Cost of Capital

The WACC of Bharat Petroleum Corporation Ltd (BPCL.NS) is 12.2%.

The Cost of Equity of Bharat Petroleum Corporation Ltd (BPCL.NS) is 16.05%.

The Cost of Debt of Bharat Petroleum Corporation Ltd (BPCL.NS) is 6.10%.

	Range	Selected
Cost of equity	14.60% - 17.50%	16.05%
Tax rate	25.30% - 26.10%	25.70%
Cost of debt	4.70% - 7.50%	6.10%
WACC	10.9% - 13.5%	12.2%

WACC

BPCL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.93	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.60%	17.50%

Tax rate	25.30%	26.10%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.70%	7.50%

After-tax WACC	10.9%	13.5%


Selected WACC	12.2%

BPCL.NS's CAPM model and how its cost of Equity is calculated

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 BPCL.NS:

cost_of_equity (16.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.93) + 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.