POWERGRID.NS WACC - Weighted Average Cost of Capital

The WACC of Power Grid Corporation of India Ltd (POWERGRID.NS) is 13.9%.

The Cost of Equity of Power Grid Corporation of India Ltd (POWERGRID.NS) is 17.25%.

The Cost of Debt of Power Grid Corporation of India Ltd (POWERGRID.NS) is 7.70%.

	Range	Selected
Cost of equity	15.00% - 19.50%	17.25%
Tax rate	14.80% - 18.40%	16.60%
Cost of debt	6.30% - 9.10%	7.70%
WACC	12.0% - 15.7%	13.9%

WACC

POWERGRID.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.98	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	19.50%

Tax rate	14.80%	18.40%
Debt/Equity ratio	0.45	0.45
Cost of debt	6.30%	9.10%

After-tax WACC	12.0%	15.7%


Selected WACC	13.9%

POWERGRID.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 POWERGRID.NS:

cost_of_equity (17.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.98) + 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.