HPL.NS WACC - Weighted Average Cost of Capital

The WACC of HPL Electric & Power Ltd (HPL.NS) is 14.1%.

The Cost of Equity of HPL Electric & Power Ltd (HPL.NS) is 16.20%.

The Cost of Debt of HPL Electric & Power Ltd (HPL.NS) is 11.95%.

	Range	Selected
Cost of equity	14.60% - 17.80%	16.20%
Tax rate	31.90% - 35.50%	33.70%
Cost of debt	10.50% - 13.40%	11.95%
WACC	12.7% - 15.5%	14.1%

WACC

HPL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.93	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.60%	17.80%

Tax rate	31.90%	35.50%
Debt/Equity ratio	0.33	0.33
Cost of debt	10.50%	13.40%

After-tax WACC	12.7%	15.5%


Selected WACC	14.1%

HPL.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 HPL.NS:

cost_of_equity (16.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.93) + 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.