IDEA.NS WACC - Weighted Average Cost of Capital

The WACC of Vodafone Idea Ltd (IDEA.NS) is 7.1%.

The Cost of Equity of Vodafone Idea Ltd (IDEA.NS) is 12.25%.

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

	Range	Selected
Cost of equity	9.80% - 14.70%	12.25%
Tax rate	-% - 1.10%	0.55%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.4% - 8.8%	7.1%

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	0.36	0.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	14.70%

Tax rate	-%	1.10%
Debt/Equity ratio	3.19	3.19
Cost of debt	4.00%	7.00%

After-tax WACC	5.4%	8.8%


Selected WACC	7.1%

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 (12.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.36) + 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.