IOC.NS WACC - Weighted Average Cost of Capital

The WACC of Indian Oil Corporation Ltd (IOC.NS) is 13.7%.

The Cost of Equity of Indian Oil Corporation Ltd (IOC.NS) is 19.00%.

The Cost of Debt of Indian Oil Corporation Ltd (IOC.NS) is 7.50%.

	Range	Selected
Cost of equity	17.50% - 20.50%	19.00%
Tax rate	24.80% - 26.70%	25.75%
Cost of debt	4.50% - 10.50%	7.50%
WACC	11.9% - 15.4%	13.7%

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	1.28	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.50%	20.50%

Tax rate	24.80%	26.70%
Debt/Equity ratio	0.66	0.66
Cost of debt	4.50%	10.50%

After-tax WACC	11.9%	15.4%


Selected WACC	13.7%

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 (19.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.28) + 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.