CGPOWER.NS WACC - Weighted Average Cost of Capital

The WACC of CG Power and Industrial Solutions Ltd (CGPOWER.NS) is 16.2%.

The Cost of Equity of CG Power and Industrial Solutions Ltd (CGPOWER.NS) is 16.15%.

The Cost of Debt of CG Power and Industrial Solutions Ltd (CGPOWER.NS) is 6.55%.

	Range	Selected
Cost of equity	14.30% - 18.00%	16.15%
Tax rate	17.00% - 22.20%	19.60%
Cost of debt	5.60% - 7.50%	6.55%
WACC	14.3% - 18.0%	16.2%

WACC

CGPOWER.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.89	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	18.00%

Tax rate	17.00%	22.20%
Debt/Equity ratio	0	0
Cost of debt	5.60%	7.50%

After-tax WACC	14.3%	18.0%


Selected WACC	16.2%

CGPOWER.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 CGPOWER.NS:

cost_of_equity (16.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.89) + 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.