INDIGO.NS WACC - Weighted Average Cost of Capital

The WACC of Interglobe Aviation Ltd (INDIGO.NS) is 10.8%.

The Cost of Equity of Interglobe Aviation Ltd (INDIGO.NS) is 11.65%.

The Cost of Debt of Interglobe Aviation Ltd (INDIGO.NS) is 8.00%.

	Range	Selected
Cost of equity	10.60% - 12.70%	11.65%
Tax rate	0.40% - 0.90%	0.65%
Cost of debt	7.40% - 8.60%	8.00%
WACC	9.9% - 11.7%	10.8%

WACC

INDIGO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.45	0.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	12.70%

Tax rate	0.40%	0.90%
Debt/Equity ratio	0.29	0.29
Cost of debt	7.40%	8.60%

After-tax WACC	9.9%	11.7%


Selected WACC	10.8%

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 (11.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.45) + 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.