IRB.NS WACC - Weighted Average Cost of Capital

The WACC of IRB Infrastructure Developers Ltd (IRB.NS) is 16.8%.

The Cost of Equity of IRB Infrastructure Developers Ltd (IRB.NS) is 22.65%.

The Cost of Debt of IRB Infrastructure Developers Ltd (IRB.NS) is 10.60%.

	Range	Selected
Cost of equity	19.90% - 25.40%	22.65%
Tax rate	33.80% - 35.10%	34.45%
Cost of debt	10.50% - 10.70%	10.60%
WACC	15.1% - 18.5%	16.8%

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	1.57	1.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	19.90%	25.40%

Tax rate	33.80%	35.10%
Debt/Equity ratio	0.6	0.6
Cost of debt	10.50%	10.70%

After-tax WACC	15.1%	18.5%


Selected WACC	16.8%

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 (22.65%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.57) + 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.