GVKPIL.NS WACC - Weighted Average Cost of Capital

The WACC of GVK Power & Infrastructure Ltd (GVKPIL.NS) is 15.6%.

The Cost of Equity of GVK Power & Infrastructure Ltd (GVKPIL.NS) is 56.50%.

The Cost of Debt of GVK Power & Infrastructure Ltd (GVKPIL.NS) is 11.25%.

	Range	Selected
Cost of equity	46.70% - 66.30%	56.50%
Tax rate	10.60% - 13.40%	12.00%
Cost of debt	7.10% - 15.40%	11.25%
WACC	11.3% - 19.8%	15.6%

WACC

GVKPIL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	4.8	6.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	46.70%	66.30%

Tax rate	10.60%	13.40%
Debt/Equity ratio	7.14	7.14
Cost of debt	7.10%	15.40%

After-tax WACC	11.3%	19.8%


Selected WACC	15.6%

GVKPIL.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 GVKPIL.NS:

cost_of_equity (56.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (4.8) + 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.