IDFCFIRSTB.NS WACC - Weighted Average Cost of Capital

The WACC of IDFC First Bank Ltd (IDFCFIRSTB.NS) is 11.4%.

The Cost of Equity of IDFC First Bank Ltd (IDFCFIRSTB.NS) is 19.50%.

The Cost of Debt of IDFC First Bank Ltd (IDFCFIRSTB.NS) is 5.00%.

	Range	Selected
Cost of equity	16.60% - 22.40%	19.50%
Tax rate	22.30% - 24.00%	23.15%
Cost of debt	5.00% - 5.00%	5.00%
WACC	10.0% - 12.7%	11.4%

WACC

IDFCFIRSTB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.18	1.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.60%	22.40%

Tax rate	22.30%	24.00%
Debt/Equity ratio	1.07	1.07
Cost of debt	5.00%	5.00%

After-tax WACC	10.0%	12.7%


Selected WACC	11.4%

IDFCFIRSTB.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 IDFCFIRSTB.NS:

cost_of_equity (19.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.18) + 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.