PNB.NS WACC - Weighted Average Cost of Capital

The WACC of Punjab National Bank (PNB.NS) is 11.3%.

The Cost of Equity of Punjab National Bank (PNB.NS) is 16.85%.

The Cost of Debt of Punjab National Bank (PNB.NS) is 5.00%.

	Range	Selected
Cost of equity	15.00% - 18.70%	16.85%
Tax rate	37.30% - 39.80%	38.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	10.2% - 12.4%	11.3%

WACC

PNB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.97	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	18.70%

Tax rate	37.30%	39.80%
Debt/Equity ratio	0.66	0.66
Cost of debt	5.00%	5.00%

After-tax WACC	10.2%	12.4%


Selected WACC	11.3%

PNB.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 PNB.NS:

cost_of_equity (16.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.97) + 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.