OIL.NS WACC - Weighted Average Cost of Capital

The WACC of Oil India Ltd (OIL.NS) is 14.3%.

The Cost of Equity of Oil India Ltd (OIL.NS) is 17.60%.

The Cost of Debt of Oil India Ltd (OIL.NS) is 6.30%.

	Range	Selected
Cost of equity	15.30% - 19.90%	17.60%
Tax rate	23.50% - 25.10%	24.30%
Cost of debt	5.00% - 7.60%	6.30%
WACC	12.4% - 16.3%	14.3%

WACC

OIL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.02	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.30%	19.90%

Tax rate	23.50%	25.10%
Debt/Equity ratio	0.34	0.34
Cost of debt	5.00%	7.60%

After-tax WACC	12.4%	16.3%


Selected WACC	14.3%

OIL.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 OIL.NS:

cost_of_equity (17.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.02) + 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.