GPIL.NS WACC - Weighted Average Cost of Capital

The WACC of Godawari Power and Ispat Ltd (GPIL.NS) is 16.5%.

The Cost of Equity of Godawari Power and Ispat Ltd (GPIL.NS) is 16.45%.

The Cost of Debt of Godawari Power and Ispat Ltd (GPIL.NS) is 22.35%.

	Range	Selected
Cost of equity	14.90% - 18.00%	16.45%
Tax rate	25.50% - 26.10%	25.80%
Cost of debt	7.00% - 37.70%	22.35%
WACC	14.7% - 18.2%	16.5%

WACC

GPIL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.96	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.90%	18.00%

Tax rate	25.50%	26.10%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.00%	37.70%

After-tax WACC	14.7%	18.2%


Selected WACC	16.5%

GPIL.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 GPIL.NS:

cost_of_equity (16.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.96) + 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.