HDFCLIFE.NS WACC - Weighted Average Cost of Capital
The WACC of HDFC Life Insurance Company Ltd (HDFCLIFE.NS) is 14.2%.
| Range | Selected | |
| Cost of equity | 12.6% - 16.0% | 14.3% |
| Tax rate | 1.3% - 2.5% | 1.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 12.5% - 15.9% | 14.2% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.69 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.6% | 16.0% |
| Tax rate | 1.3% | 2.5% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 12.5% | 15.9% |
| Selected WACC | 14.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HDFCLIFE.NS | HDFC Life Insurance Company Ltd | 0.02 | 0.77 | 0.76 |
| 000627.SZ | Hubei Biocause Pharmaceutical Co Ltd | 0.53 | 2.01 | 1.32 |
| 2883.TW | China Development Financial Holding Corp | 1.49 | 0.15 | 0.06 |
| 8210.SR | Bupa Arabia for Cooperative Insurance Company SJSC | 0.01 | 0.93 | 0.92 |
| ICICIGI.NS | ICICI Lombard General Insurance Company Ltd | 0 | 0.86 | 0.86 |
| ICICIPRULI.NS | ICICI Prudential Life Insurance Company Ltd | 0.03 | 1.15 | 1.12 |
| LIFE.JK | Asuransi Jiwa Sinarmas MSIG Tbk PT | 0 | -0.34 | -0.34 |
| MFSL.NS | Max Financial Services Ltd | 0.02 | 0.78 | 0.77 |
| MPL.AX | Medibank Private Ltd | 0.02 | 0.18 | 0.18 |
| PNIN.JK | Paninvest Tbk PT | 41 | 1.03 | 0.02 |
| Low | High | |
| Unlevered beta | 0.53 | 0.81 |
| Relevered beta | 0.54 | 0.81 |
| Adjusted relevered beta | 0.69 | 0.87 |
HDFCLIFE.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 HDFCLIFE.NS:
cost_of_equity (14.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.69) + 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.