IDEA.NS WACC - Weighted Average Cost of Capital

The WACC of Vodafone Idea Ltd (IDEA.NS) is 7.4%.

The Cost of Equity of Vodafone Idea Ltd (IDEA.NS) is 12.15%.

The Cost of Debt of Vodafone Idea Ltd (IDEA.NS) is 5.50%.

	Range	Selected
Cost of equity	10.80% - 13.50%	12.15%
Tax rate	-% - 0.10%	0.05%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.0% - 8.9%	7.4%

WACC

IDEA.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.47	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	13.50%

Tax rate	-%	0.10%
Debt/Equity ratio	2.42	2.42
Cost of debt	4.00%	7.00%

After-tax WACC	6.0%	8.9%


Selected WACC	7.4%

IDEA.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 IDEA.NS:

cost_of_equity (12.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.47) + 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.