JPPOWER.NS WACC - Weighted Average Cost of Capital

The WACC of Jaiprakash Power Ventures Ltd (JPPOWER.NS) is 13.0%.

The Cost of Equity of Jaiprakash Power Ventures Ltd (JPPOWER.NS) is 16.15%.

The Cost of Debt of Jaiprakash Power Ventures Ltd (JPPOWER.NS) is 8.95%.

	Range	Selected
Cost of equity	14.90% - 17.40%	16.15%
Tax rate	32.90% - 46.00%	39.45%
Cost of debt	8.60% - 9.30%	8.95%
WACC	12.2% - 13.8%	13.0%

WACC

JPPOWER.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.96	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.90%	17.40%

Tax rate	32.90%	46.00%
Debt/Equity ratio	0.41	0.41
Cost of debt	8.60%	9.30%

After-tax WACC	12.2%	13.8%


Selected WACC	13.0%

JPPOWER.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 JPPOWER.NS:

cost_of_equity (16.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.96) + 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.