IRB.NS WACC - Weighted Average Cost of Capital

The WACC of IRB Infrastructure Developers Ltd (IRB.NS) is 11.5%.

The Cost of Equity of IRB Infrastructure Developers Ltd (IRB.NS) is 14.35%.

The Cost of Debt of IRB Infrastructure Developers Ltd (IRB.NS) is 11.70%.

	Range	Selected
Cost of equity	11.70% - 17.00%	14.35%
Tax rate	32.60% - 33.60%	33.10%
Cost of debt	8.00% - 15.40%	11.70%
WACC	9.0% - 14.1%	11.5%

WACC

IRB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.59	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.70%	17.00%

Tax rate	32.60%	33.60%
Debt/Equity ratio	0.77	0.77
Cost of debt	8.00%	15.40%

After-tax WACC	9.0%	14.1%


Selected WACC	11.5%

IRB.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 IRB.NS:

cost_of_equity (14.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.59) + 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.