PNBHOUSING.NS WACC - Weighted Average Cost of Capital

The WACC of PNB Housing Finance Ltd (PNBHOUSING.NS) is 11.9%.

The Cost of Equity of PNB Housing Finance Ltd (PNBHOUSING.NS) is 17.15%.

The Cost of Debt of PNB Housing Finance Ltd (PNBHOUSING.NS) is 13.15%.

	Range	Selected
Cost of equity	15.80% - 18.50%	17.15%
Tax rate	22.80% - 22.90%	22.85%
Cost of debt	7.70% - 18.60%	13.15%
WACC	8.4% - 15.4%	11.9%

WACC

PNBHOUSING.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.07	1.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.80%	18.50%

Tax rate	22.80%	22.90%
Debt/Equity ratio	3.02	3.02
Cost of debt	7.70%	18.60%

After-tax WACC	8.4%	15.4%


Selected WACC	11.9%

PNBHOUSING.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 PNBHOUSING.NS:

cost_of_equity (17.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.07) + 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.