IDBI.NS WACC - Weighted Average Cost of Capital

The WACC of IDBI Bank Ltd (IDBI.NS) is 13.9%.

The Cost of Equity of IDBI Bank Ltd (IDBI.NS) is 15.95%.

The Cost of Debt of IDBI Bank Ltd (IDBI.NS) is 5.00%.

	Range	Selected
Cost of equity	13.90% - 18.00%	15.95%
Tax rate	30.90% - 31.60%	31.25%
Cost of debt	5.00% - 5.00%	5.00%
WACC	12.2% - 15.6%	13.9%

WACC

IDBI.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.85	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.90%	18.00%

Tax rate	30.90%	31.60%
Debt/Equity ratio	0.2	0.2
Cost of debt	5.00%	5.00%

After-tax WACC	12.2%	15.6%


Selected WACC	13.9%

IDBI.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 IDBI.NS:

cost_of_equity (15.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.85) + 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.