CENTRALBK.NS WACC - Weighted Average Cost of Capital

The WACC of Central Bank of India Ltd (CENTRALBK.NS) is 12.2%.

The Cost of Equity of Central Bank of India Ltd (CENTRALBK.NS) is 17.95%.

The Cost of Debt of Central Bank of India Ltd (CENTRALBK.NS) is 5.00%.

	Range	Selected
Cost of equity	15.40% - 20.50%	17.95%
Tax rate	35.40% - 37.60%	36.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	10.7% - 13.8%	12.2%

WACC

CENTRALBK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.03	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.40%	20.50%

Tax rate	35.40%	37.60%
Debt/Equity ratio	0.63	0.63
Cost of debt	5.00%	5.00%

After-tax WACC	10.7%	13.8%


Selected WACC	12.2%

CENTRALBK.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 CENTRALBK.NS:

cost_of_equity (17.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.03) + 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.