GULFPETRO.NS WACC - Weighted Average Cost of Capital

The WACC of GP Petroleums Ltd (GULFPETRO.NS) is 14.4%.

The Cost of Equity of GP Petroleums Ltd (GULFPETRO.NS) is 15.80%.

The Cost of Debt of GP Petroleums Ltd (GULFPETRO.NS) is 6.20%.

	Range	Selected
Cost of equity	13.90% - 17.70%	15.80%
Tax rate	25.60% - 26.40%	26.00%
Cost of debt	4.90% - 7.50%	6.20%
WACC	12.6% - 16.1%	14.4%

WACC

GULFPETRO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.85	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.90%	17.70%

Tax rate	25.60%	26.40%
Debt/Equity ratio	0.14	0.14
Cost of debt	4.90%	7.50%

After-tax WACC	12.6%	16.1%


Selected WACC	14.4%

GULFPETRO.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 GULFPETRO.NS:

cost_of_equity (15.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.85) + 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.