IDBI.NS WACC - Weighted Average Cost of Capital

The WACC of IDBI Bank Ltd (IDBI.NS) is 14.0%.

The Cost of Equity of IDBI Bank Ltd (IDBI.NS) is 16.50%.

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

	Range	Selected
Cost of equity	14.30% - 18.70%	16.50%
Tax rate	31.80% - 36.10%	33.95%
Cost of debt	5.00% - 5.00%	5.00%
WACC	12.2% - 15.8%	14.0%

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	0.89	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	18.70%

Tax rate	31.80%	36.10%
Debt/Equity ratio	0.23	0.23
Cost of debt	5.00%	5.00%

After-tax WACC	12.2%	15.8%


Selected WACC	14.0%

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 (16.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.89) + 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.