IOC.NS WACC - Weighted Average Cost of Capital

The WACC of Indian Oil Corporation Ltd (IOC.NS) is 9.4%.

The Cost of Equity of Indian Oil Corporation Ltd (IOC.NS) is 12.90%.

The Cost of Debt of Indian Oil Corporation Ltd (IOC.NS) is 6.60%.

	Range	Selected
Cost of equity	10.30% - 15.50%	12.90%
Tax rate	23.70% - 24.80%	24.25%
Cost of debt	5.30% - 7.90%	6.60%
WACC	7.5% - 11.2%	9.4%

WACC

IOC.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.42	0.82

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	15.50%

Tax rate	23.70%	24.80%
Debt/Equity ratio	0.8	0.8
Cost of debt	5.30%	7.90%

After-tax WACC	7.5%	11.2%


Selected WACC	9.4%

IOC.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 IOC.NS:

cost_of_equity (12.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.42) + 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.