HINDPETRO.NS WACC - Weighted Average Cost of Capital

The WACC of Hindustan Petroleum Corp Ltd (HINDPETRO.NS) is 12.4%.

The Cost of Equity of Hindustan Petroleum Corp Ltd (HINDPETRO.NS) is 17.15%.

The Cost of Debt of Hindustan Petroleum Corp Ltd (HINDPETRO.NS) is 8.25%.

	Range	Selected
Cost of equity	14.40% - 19.90%	17.15%
Tax rate	23.70% - 25.00%	24.35%
Cost of debt	6.50% - 10.00%	8.25%
WACC	10.3% - 14.5%	12.4%

WACC

HINDPETRO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.91	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.40%	19.90%

Tax rate	23.70%	25.00%
Debt/Equity ratio	0.76	0.76
Cost of debt	6.50%	10.00%

After-tax WACC	10.3%	14.5%


Selected WACC	12.4%

HINDPETRO.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 HINDPETRO.NS:

cost_of_equity (17.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.91) + 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.