The WACC of GVK Power & Infrastructure Ltd (GVKPIL.NS) is 14.7%.
| Range | Selected | |
| Cost of equity | 45.00% - 63.80% | 54.40% |
| Tax rate | 9.10% - 13.40% | 11.25% |
| Cost of debt | 4.60% - 15.40% | 10.00% |
| WACC | 9.5% - 19.9% | 14.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 4.58 | 6.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 45.00% | 63.80% |
| Tax rate | 9.10% | 13.40% |
| Debt/Equity ratio | 6.68 | 6.68 |
| Cost of debt | 4.60% | 15.40% |
| After-tax WACC | 9.5% | 19.9% |
| Selected WACC | 14.7% | |
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 (54.40%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (4.58) + 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.