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 16.55%.

The Cost of Debt of GAIL (India) Ltd (GAIL.NS) is 7.40%.

	Range	Selected
Cost of equity	15.20% - 17.90%	16.55%
Tax rate	21.00% - 21.90%	21.45%
Cost of debt	6.90% - 7.90%	7.40%
WACC	13.3% - 15.7%	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	1	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.20%	17.90%

Tax rate	21.00%	21.90%
Debt/Equity ratio	0.23	0.23
Cost of debt	6.90%	7.90%

After-tax WACC	13.3%	15.7%


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 (16.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1) + 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.