GAIL.NS WACC - Weighted Average Cost of Capital

The WACC of GAIL (India) Ltd (GAIL.NS) is 14.5%.

The Cost of Equity of GAIL (India) Ltd (GAIL.NS) is 16.00%.

The Cost of Debt of GAIL (India) Ltd (GAIL.NS) is 7.05%.

	Range	Selected
Cost of equity	14.10% - 17.90%	16.00%
Tax rate	20.50% - 20.80%	20.65%
Cost of debt	6.50% - 7.60%	7.05%
WACC	12.8% - 16.2%	14.5%

WACC

GAIL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.87	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.10%	17.90%

Tax rate	20.50%	20.80%
Debt/Equity ratio	0.17	0.17
Cost of debt	6.50%	7.60%

After-tax WACC	12.8%	16.2%


Selected WACC	14.5%

GAIL.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 GAIL.NS:

cost_of_equity (16.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.87) + 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.