GIPCL.NS WACC - Weighted Average Cost of Capital

The WACC of Gujarat Industries Power Company Ltd (GIPCL.NS) is 13.7%.

The Cost of Equity of Gujarat Industries Power Company Ltd (GIPCL.NS) is 15.40%.

The Cost of Debt of Gujarat Industries Power Company Ltd (GIPCL.NS) is 7.10%.

	Range	Selected
Cost of equity	14.10% - 16.70%	15.40%
Tax rate	24.30% - 27.60%	25.95%
Cost of debt	6.60% - 7.60%	7.10%
WACC	12.6% - 14.8%	13.7%

WACC

GIPCL.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	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.10%	16.70%

Tax rate	24.30%	27.60%
Debt/Equity ratio	0.2	0.2
Cost of debt	6.60%	7.60%

After-tax WACC	12.6%	14.8%


Selected WACC	13.7%

GIPCL.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 GIPCL.NS:

cost_of_equity (15.40%) = 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.