ONGC.NS WACC - Weighted Average Cost of Capital

The WACC of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 11.8%.

The Cost of Equity of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 15.40%.

The Cost of Debt of Oil and Natural Gas Corporation Ltd (ONGC.NS) is 6.20%.

	Range	Selected
Cost of equity	12.90% - 17.90%	15.40%
Tax rate	25.00% - 27.10%	26.05%
Cost of debt	4.50% - 7.90%	6.20%
WACC	9.7% - 13.8%	11.8%

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	0.73	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.90%	17.90%

Tax rate	25.00%	27.10%
Debt/Equity ratio	0.51	0.51
Cost of debt	4.50%	7.90%

After-tax WACC	9.7%	13.8%


Selected WACC	11.8%

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 (15.40%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.73) + 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.