HINDALCO.NS WACC - Weighted Average Cost of Capital

The WACC of Hindalco Industries Ltd (HINDALCO.NS) is 13.5%.

The Cost of Equity of Hindalco Industries Ltd (HINDALCO.NS) is 16.25%.

The Cost of Debt of Hindalco Industries Ltd (HINDALCO.NS) is 6.85%.

	Range	Selected
Cost of equity	15.00% - 17.50%	16.25%
Tax rate	27.50% - 27.90%	27.70%
Cost of debt	5.80% - 7.90%	6.85%
WACC	12.3% - 14.6%	13.5%

WACC

HINDALCO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.97	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	17.50%

Tax rate	27.50%	27.90%
Debt/Equity ratio	0.32	0.32
Cost of debt	5.80%	7.90%

After-tax WACC	12.3%	14.6%


Selected WACC	13.5%

HINDALCO.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 HINDALCO.NS:

cost_of_equity (16.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.97) + 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.