JSWENERGY.NS WACC - Weighted Average Cost of Capital

The WACC of JSW Energy Ltd (JSWENERGY.NS) is 12.5%.

The Cost of Equity of JSW Energy Ltd (JSWENERGY.NS) is 14.00%.

The Cost of Debt of JSW Energy Ltd (JSWENERGY.NS) is 10.90%.

	Range	Selected
Cost of equity	11.90% - 16.10%	14.00%
Tax rate	23.10% - 24.30%	23.70%
Cost of debt	9.70% - 12.10%	10.90%
WACC	10.7% - 14.2%	12.5%

WACC

JSWENERGY.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.61	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	16.10%

Tax rate	23.10%	24.30%
Debt/Equity ratio	0.37	0.37
Cost of debt	9.70%	12.10%

After-tax WACC	10.7%	14.2%


Selected WACC	12.5%

JSWENERGY.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 JSWENERGY.NS:

cost_of_equity (14.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.61) + 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.