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 16.00%.

The Cost of Debt of Chennai Petroleum Corporation Ltd (CHENNPETRO.NS) is 7.15%.

	Range	Selected
Cost of equity	14.20% - 17.80%	16.00%
Tax rate	26.60% - 28.50%	27.55%
Cost of debt	4.30% - 10.00%	7.15%
WACC	11.6% - 15.3%	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	0.88	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.20%	17.80%

Tax rate	26.60%	28.50%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.30%	10.00%

After-tax WACC	11.6%	15.3%


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 (16.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.88) + 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.