IOB.NS WACC - Weighted Average Cost of Capital

The WACC of Indian Overseas Bank (IOB.NS) is 13.5%.

The Cost of Equity of Indian Overseas Bank (IOB.NS) is 18.45%.

The Cost of Debt of Indian Overseas Bank (IOB.NS) is 5.00%.

	Range	Selected
Cost of equity	16.30% - 20.60%	18.45%
Tax rate	7.90% - 15.20%	11.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	12.2% - 14.8%	13.5%

WACC

IOB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.14	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.30%	20.60%

Tax rate	7.90%	15.20%
Debt/Equity ratio	0.55	0.55
Cost of debt	5.00%	5.00%

After-tax WACC	12.2%	14.8%


Selected WACC	13.5%

IOB.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 IOB.NS:

cost_of_equity (18.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.14) + 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.