VEDL.NS WACC - Weighted Average Cost of Capital

The WACC of Vedanta Ltd (VEDL.NS) is 16.5%.

The Cost of Equity of Vedanta Ltd (VEDL.NS) is 21.50%.

The Cost of Debt of Vedanta Ltd (VEDL.NS) is 11.60%.

	Range	Selected
Cost of equity	19.60% - 23.40%	21.50%
Tax rate	27.00% - 28.20%	27.60%
Cost of debt	9.10% - 14.10%	11.60%
WACC	14.7% - 18.4%	16.5%

WACC

VEDL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.54	1.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	19.60%	23.40%

Tax rate	27.00%	28.20%
Debt/Equity ratio	0.61	0.61
Cost of debt	9.10%	14.10%

After-tax WACC	14.7%	18.4%


Selected WACC	16.5%

VEDL.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 VEDL.NS:

cost_of_equity (21.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.54) + 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.