DPSCLTD.NS WACC - Weighted Average Cost of Capital

The WACC of India Power Corporation Ltd (DPSCLTD.NS) is 16.0%.

The Cost of Equity of India Power Corporation Ltd (DPSCLTD.NS) is 17.70%.

The Cost of Debt of India Power Corporation Ltd (DPSCLTD.NS) is 6.50%.

	Range	Selected
Cost of equity	15.30% - 20.10%	17.70%
Tax rate	23.50% - 25.60%	24.55%
Cost of debt	5.40% - 7.60%	6.50%
WACC	13.8% - 18.1%	16.0%

WACC

DPSCLTD.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.02	1.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.30%	20.10%

Tax rate	23.50%	25.60%
Debt/Equity ratio	0.16	0.16
Cost of debt	5.40%	7.60%

After-tax WACC	13.8%	18.1%


Selected WACC	16.0%

DPSCLTD.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 DPSCLTD.NS:

cost_of_equity (17.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.02) + 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.