UNIONBANK.NS WACC - Weighted Average Cost of Capital

The WACC of Union Bank of India Ltd (UNIONBANK.NS) is 13.5%.

The Cost of Equity of Union Bank of India Ltd (UNIONBANK.NS) is 16.60%.

The Cost of Debt of Union Bank of India Ltd (UNIONBANK.NS) is 5.00%.

	Range	Selected
Cost of equity	14.60% - 18.60%	16.60%
Tax rate	29.10% - 32.90%	31.00%
Cost of debt	5.00% - 5.00%	5.00%
WACC	12.0% - 15.0%	13.5%

WACC

UNIONBANK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.93	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.60%	18.60%

Tax rate	29.10%	32.90%
Debt/Equity ratio	0.31	0.31
Cost of debt	5.00%	5.00%

After-tax WACC	12.0%	15.0%


Selected WACC	13.5%

UNIONBANK.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 UNIONBANK.NS:

cost_of_equity (16.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.93) + 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.