RPOWER.NS WACC - Weighted Average Cost of Capital

The WACC of Reliance Power Ltd (RPOWER.NS) is 14.0%.

The Cost of Equity of Reliance Power Ltd (RPOWER.NS) is 19.85%.

The Cost of Debt of Reliance Power Ltd (RPOWER.NS) is 11.30%.

	Range	Selected
Cost of equity	17.50% - 22.20%	19.85%
Tax rate	4.40% - 7.20%	5.80%
Cost of debt	7.20% - 15.40%	11.30%
WACC	10.8% - 17.2%	14.0%

WACC

RPOWER.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.28	1.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.50%	22.20%

Tax rate	4.40%	7.20%
Debt/Equity ratio	1.72	1.72
Cost of debt	7.20%	15.40%

After-tax WACC	10.8%	17.2%


Selected WACC	14.0%

RPOWER.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 RPOWER.NS:

cost_of_equity (19.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.28) + 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.