KOTAKBANK.NS
Kotak Mahindra Bank Ltd
Price:  
2,165.2 
INR
Volume:  
1,827,099
India | Banks

KOTAKBANK.NS WACC - Weighted Average Cost of Capital

The WACC of Kotak Mahindra Bank Ltd (KOTAKBANK.NS) is 13.8%.

The Cost of Equity of Kotak Mahindra Bank Ltd (KOTAKBANK.NS) is 16%.
The Cost of Debt of Kotak Mahindra Bank Ltd (KOTAKBANK.NS) is 5%.

RangeSelected
Cost of equity14.7% - 17.3%16%
Tax rate24.7% - 24.8%24.75%
Cost of debt5.0% - 5.0%5%
WACC12.7% - 14.8%13.8%
WACC

KOTAKBANK.NS WACC calculation

CategoryLowHigh
Long-term bond rate6.9%7.4%
Equity market risk premium8.3%9.3%
Adjusted beta0.941.01
Additional risk adjustments0.0%0.5%
Cost of equity14.7%17.3%
Tax rate24.7%24.8%
Debt/Equity ratio
0.220.22
Cost of debt5.0%5.0%
After-tax WACC12.7%14.8%
Selected WACC13.8%

KOTAKBANK.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 KOTAKBANK.NS:

cost_of_equity (16.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.94) + 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.