INDIGO.NS WACC - Weighted Average Cost of Capital
The WACC of Interglobe Aviation Ltd (INDIGO.NS) is 11.6%.
| Range | Selected | |
| Cost of equity | 11.0% - 13.6% | 12.3% |
| Tax rate | 0.4% - 0.9% | 0.65% |
| Cost of debt | 8.6% - 9.1% | 8.85% |
| WACC | 10.6% - 12.7% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.5 | 0.61 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.0% | 13.6% |
| Tax rate | 0.4% | 0.9% |
| Debt/Equity ratio | 0.23 | 0.23 |
| Cost of debt | 8.6% | 9.1% |
| After-tax WACC | 10.6% | 12.7% |
| Selected WACC | 11.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| INDIGO.NS | Interglobe Aviation Ltd | 0.23 | 1.36 | 1.11 |
| 003490.KS | Korean Air Lines Co Ltd | 2.23 | 0.26 | 0.08 |
| 2610.TW | China Airlines Ltd | 0.74 | 0.52 | 0.3 |
| 2618.TW | Eva Airways Corp | 0.25 | 0.34 | 0.28 |
| 293.HK | Cathay Pacific Airways Ltd | 0.99 | 0.2 | 0.1 |
| 601021.SS | Spring Airlines Co Ltd | 0.36 | 0.87 | 0.64 |
| 603885.SS | JUNEYAO AIRLINES Co Ltd | 1.22 | 1.31 | 0.59 |
| AFLT.ME | Aeroflot-Rossiyskiye Avialinii PAO | 3.52 | -0.23 | -0.05 |
| JETAIRWAYS.NS | Jet Airways (India) Ltd | 21.65 | -0.14 | -0.01 |
| SPICEJET.NS | Spicejet Ltd | 3.84 | 1.99 | 0.41 |
| Low | High | |
| Unlevered beta | 0.21 | 0.35 |
| Relevered beta | 0.25 | 0.42 |
| Adjusted relevered beta | 0.5 | 0.61 |
INDIGO.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 INDIGO.NS:
cost_of_equity (12.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.5) + 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.