INDIGO.NS WACC - Weighted Average Cost of Capital

The WACC of Interglobe Aviation Ltd (INDIGO.NS) is 11.4%.

The Cost of Equity of Interglobe Aviation Ltd (INDIGO.NS) is 12.35%.

The Cost of Debt of Interglobe Aviation Ltd (INDIGO.NS) is 9.15%.

	Range	Selected
Cost of equity	11.30% - 13.40%	12.35%
Tax rate	1.10% - 2.70%	1.90%
Cost of debt	9.10% - 9.20%	9.15%
WACC	10.7% - 12.2%	11.4%

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	0.53	0.6

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	13.40%

Tax rate	1.10%	2.70%
Debt/Equity ratio	0.37	0.37
Cost of debt	9.10%	9.20%

After-tax WACC	10.7%	12.2%


Selected WACC	11.4%

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 (12.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.53) + 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.