ONGC.NS WACC - Weighted Average Cost of Capital

The WACC of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 10.5%.

The Cost of Equity of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 13.30%.

The Cost of Debt of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 6.95%.

	Range	Selected
Cost of equity	11.30% - 15.30%	13.30%
Tax rate	24.50% - 25.70%	25.10%
Cost of debt	6.00% - 7.90%	6.95%
WACC	8.9% - 12.1%	10.5%

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	0.53	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	15.30%

Tax rate	24.50%	25.70%
Debt/Equity ratio	0.53	0.53
Cost of debt	6.00%	7.90%

After-tax WACC	8.9%	12.1%


Selected WACC	10.5%

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 (13.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.53) + 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.