IPCALAB.NS WACC - Weighted Average Cost of Capital

The WACC of IPCA Laboratories Ltd (IPCALAB.NS) is 12.5%.

The Cost of Equity of IPCA Laboratories Ltd (IPCALAB.NS) is 12.80%.

The Cost of Debt of IPCA Laboratories Ltd (IPCALAB.NS) is 6.45%.

	Range	Selected
Cost of equity	10.80% - 14.80%	12.80%
Tax rate	26.30% - 31.80%	29.05%
Cost of debt	5.40% - 7.50%	6.45%
WACC	10.5% - 14.5%	12.5%

WACC

IPCALAB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.47	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	14.80%

Tax rate	26.30%	31.80%
Debt/Equity ratio	0.03	0.03
Cost of debt	5.40%	7.50%

After-tax WACC	10.5%	14.5%


Selected WACC	12.5%

IPCALAB.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 IPCALAB.NS:

cost_of_equity (12.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.47) + 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.