HDFCBANK.NS
HDFC Bank Ltd
Price:  
1,923.50 
INR
Volume:  
9,078,797.00
India | Banks
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HDFCBANK.NS WACC - Weighted Average Cost of Capital

The WACC of HDFC Bank Ltd (HDFCBANK.NS) is 12.5%.

The Cost of Equity of HDFC Bank Ltd (HDFCBANK.NS) is 16.30%.
The Cost of Debt of HDFC Bank Ltd (HDFCBANK.NS) is 5.00%.

Range Selected
Cost of equity 14.80% - 17.80% 16.30%
Tax rate 24.50% - 25.00% 24.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 11.5% - 13.6% 12.5%
WACC

HDFCBANK.NS WACC calculation

Category Low High
Long-term bond rate 6.9% 7.4%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.95 1.07
Additional risk adjustments 0.0% 0.5%
Cost of equity 14.80% 17.80%
Tax rate 24.50% 25.00%
Debt/Equity ratio 0.43 0.43
Cost of debt 5.00% 5.00%
After-tax WACC 11.5% 13.6%
Selected WACC 12.5%

HDFCBANK.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 HDFCBANK.NS:

cost_of_equity (16.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.95) + 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.