PETRONET.NS WACC - Weighted Average Cost of Capital

The WACC of Petronet LNG Ltd (PETRONET.NS) is 12.5%.

The Cost of Equity of Petronet LNG Ltd (PETRONET.NS) is 13.10%.

The Cost of Debt of Petronet LNG Ltd (PETRONET.NS) is 5.75%.

	Range	Selected
Cost of equity	11.50% - 14.70%	13.10%
Tax rate	24.90% - 25.20%	25.05%
Cost of debt	4.00% - 7.50%	5.75%
WACC	10.9% - 14.1%	12.5%

WACC

PETRONET.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.55	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	14.70%

Tax rate	24.90%	25.20%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.00%	7.50%

After-tax WACC	10.9%	14.1%


Selected WACC	12.5%

PETRONET.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 PETRONET.NS:

cost_of_equity (13.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.55) + 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.