IDBI.NS
IDBI Bank Ltd
Price:  
93.37 
INR
Volume:  
10,593,463.00
India | Banks
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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.