ONGC.NS WACC - Weighted Average Cost of Capital

The WACC of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 11.4%.

The Cost of Equity of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 15.10%.

The Cost of Debt of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 7.05%.

	Range	Selected
Cost of equity	11.70% - 18.50%	15.10%
Tax rate	24.50% - 25.70%	25.10%
Cost of debt	6.00% - 8.10%	7.05%
WACC	9.0% - 13.8%	11.4%

WACC

ONGC.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.58	1.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.70%	18.50%

Tax rate	24.50%	25.70%
Debt/Equity ratio	0.61	0.61
Cost of debt	6.00%	8.10%

After-tax WACC	9.0%	13.8%


Selected WACC	11.4%

ONGC.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 ONGC.NS:

cost_of_equity (15.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.58) + 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.