ONGC.NS WACC - Weighted Average Cost of Capital

The WACC of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 12.1%.

The Cost of Equity of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 15.45%.

The Cost of Debt of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 7.50%.

	Range	Selected
Cost of equity	12.90% - 18.00%	15.45%
Tax rate	24.50% - 25.70%	25.10%
Cost of debt	6.90% - 8.10%	7.50%
WACC	10.3% - 14.0%	12.1%

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	0.72	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.90%	18.00%

Tax rate	24.50%	25.70%
Debt/Equity ratio	0.5	0.5
Cost of debt	6.90%	8.10%

After-tax WACC	10.3%	14.0%


Selected WACC	12.1%

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 (15.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.