CHENNPETRO.NS
Chennai Petroleum Corporation Ltd
Price:  
651.15 
INR
Volume:  
1,142,703.00
India | Oil, Gas & Consumable Fuels
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CHENNPETRO.NS WACC - Weighted Average Cost of Capital

The WACC of Chennai Petroleum Corporation Ltd (CHENNPETRO.NS) is 13.5%.

The Cost of Equity of Chennai Petroleum Corporation Ltd (CHENNPETRO.NS) is 15.70%.
The Cost of Debt of Chennai Petroleum Corporation Ltd (CHENNPETRO.NS) is 8.80%.

Range Selected
Cost of equity 13.40% - 18.00% 15.70%
Tax rate 26.20% - 26.50% 26.35%
Cost of debt 5.50% - 12.10% 8.80%
WACC 11.2% - 15.8% 13.5%
WACC

CHENNPETRO.NS WACC calculation

Category Low High
Long-term bond rate 6.9% 7.4%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.79 1.08
Additional risk adjustments 0.0% 0.5%
Cost of equity 13.40% 18.00%
Tax rate 26.20% 26.50%
Debt/Equity ratio 0.31 0.31
Cost of debt 5.50% 12.10%
After-tax WACC 11.2% 15.8%
Selected WACC 13.5%

CHENNPETRO.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 CHENNPETRO.NS:

cost_of_equity (15.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.79) + 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.