Free Tool · Cost of capital
WACC Calculator: Work Out Cost of Equity and WACC for Indian Companies.
Enter market values, beta and borrowing cost; after a short form you get cost of equity, WACC, a sensitivity grid and a free Excel model.
Enter market values, beta and borrowing cost; after a short form you get cost of equity, WACC, a sensitivity grid and a free Excel model.
Enter money in ₹ crore and rates in %. The market inputs are pre-filled with dated defaults; change any of them.
Cost of equity (CAPM)
Cost of debt
Enter your details to see your cost of equity, WACC and sensitivity grid now, plus the free Excel model. It takes 10 seconds.
Updated 10 October 2026 · Market inputs checked October 2026
Quick answer: WACC (weighted average cost of capital) is the average yearly return a company must earn to satisfy both its shareholders and its lenders. The formula is WACC = E/V × Ke + D/V × Kd × (1 − t). For an Indian company, the cost of equity (Ke) usually comes from CAPM (the Capital Asset Pricing Model). That is the ≈10-year G-Sec (Government of India bond) yield (7.29% on 8 Oct 2026, per RBI) plus beta × India's equity risk premium (6.92%, Damodaran, July 2026).
Illustrative example: ₹750 crore of equity, ₹250 crore of debt, a beta of 1.0, a 9% borrowing cost and a 25.17% tax rate give a WACC of about 12.34%.
WACC is the minimum average return a company has to earn on all the money it uses. That money comes from two groups. Shareholders put in equity and expect a return for their risk. Lenders give loans and charge interest. WACC blends the two costs, weighted by how much each group has put in, at today's market values.
Think of a family that buys a ₹1 crore flat with ₹75 lakh of savings and a ₹25 lakh home loan. Say the savings could earn 14% elsewhere and the loan costs 9%. The flat must then earn about 12.75% a year (0.75 × 14% + 0.25 × 9%) just to cover both, before any tax benefit (illustrative). A company's WACC works the same way.
Here E is the market value of equity, D the market value of debt and V = E + D. Ke is the cost of equity, Kd the pre-tax cost of debt and t the tax rate. Analysts use WACC as the discount rate in a DCF (discounted cash flow) valuation; try it in our DCF Calculator.
Most analysts use CAPM. It says shareholders want a safe return plus a reward for risk: Ke = risk-free rate + beta × equity risk premium. With this calculator's defaults and a beta of 1.0, that is 7.29% + 1.0 × 6.92% = 14.21% a year (illustrative).
The risk-free rate is what you earn on a loan to the Government of India, the safest rupee borrower. The equity risk premium (ERP) is the extra yearly return investors demand for owning shares instead of government bonds. Beta scales that premium up or down for one company's riskiness.
| Input | Default here | Source and date |
|---|---|---|
| Risk-free rate (≈10-year G-Sec) | 7.2898% | RBI: 6.94% GS 2036 yield, as on 8 Oct 2026 |
| Equity risk premium, India | 6.92% | Damodaran (NYU Stern), country risk file, July 2026 update |
| India default spread (optional) | 1.75% | Same Damodaran file (rating-based spread) |
| Beta | 1.00 | Placeholder: replace with the company's own beta |
| Tax rate | 25.17% / 34.94% | Concessional regime / old regime, large company; confirm on incometaxindia.gov.in |
Only two market numbers drive the cost of equity here, and both are dated, so refresh them on the day you value a company.
For rupee cash flows, start with the ≈10-year Government of India bond yield, because it matches the currency and a long time horizon. Professor Aswath Damodaran argues this yield still carries a little default risk, since India's credit rating is below the top AAA grade. His method subtracts India's default spread (1.75%, July 2026) to get a riskless rupee rate.
Why it matters: his 6.92% India ERP already includes an extra premium for country risk. Adding it on top of the full G-Sec yield counts some of India's risk twice. The full-yield approach is simpler and gives a more cautious (higher) WACC, which is why the calculator starts there. Tick "Use Damodaran's method" to compare both.
| Approach (illustrative example above) | Risk-free used | Cost of equity | WACC |
|---|---|---|---|
| G-Sec yield as it is | 7.29% | 14.21% | 12.34% |
| Damodaran: G-Sec minus default spread | 5.54% | 12.46% | 11.03% |
The method you pick moves this WACC by about 1.3 percentage points, so always say which one you used.
Beta measures how much a stock moves when the whole market moves. A beta of 1.2 means the stock tends to rise or fall about 1.2% when the market moves 1%. Stock-data websites show it, or you can estimate it in Excel from two to five years of prices.
Think of beta as a volume knob. At 1.0 the stock plays at the market's volume; at 1.5 it booms louder both ways; at 0.6 it stays quieter. To estimate it yourself:
=SLOPE(stock returns, index returns). The answer is the raw beta.Raw betas are noisy. For an unlisted or thinly traded company, analysts borrow the average beta of listed peers; Damodaran publishes industry betas on his NYU Stern data page.
Interest is a tax-deductible expense, so borrowing lowers a company's tax bill. That is why WACC uses the after-tax cost of debt: Kd × (1 − tax rate). Use the rate the company actually pays. Companies that opt for the concessional regime pay 25.17%. Under the old regime, a company with turnover above ₹400 crore and income above ₹10 crore pays 34.94% (30% plus surcharge and cess).
Illustrative example: at a 9% borrowing cost and a 25.17% tax rate, debt really costs 9% × (1 − 0.2517) = 6.73%. On a ₹100 crore loan, that is ₹9 crore of interest, but only about ₹6.73 crore after the tax saving.
A WACC always lands between the after-tax cost of debt and the cost of equity, closer to whichever has the bigger weight. Then check four things: market values, not book values; one currency throughout; today's borrowing rate, not an old loan's; and dated market inputs. Your result's sensitivity grid shows how far WACC moves when beta or the ERP shifts.
There is no single good number. WACC depends on the company's risk, its debt and its tax rate. With the October 2026 defaults, a company with a beta of 1.0 and no debt has a WACC equal to its cost of equity, about 14.21%. Riskier, more volatile businesses have higher WACCs; steady businesses with cheap debt have lower ones.
Use market values. Shareholders and lenders expect returns on what their stake is worth today, not on old accounting figures. For equity, use market capitalisation: share price times the number of shares. For debt, book value is a common stand-in when the company's bonds do not trade.
In his July 2026 country risk update, Professor Aswath Damodaran of NYU Stern puts India's total equity risk premium at 6.92%. That is a mature-market premium plus an extra premium for investing in India. He updates the file regularly, so check his data page for the latest.
Only in an unusual case. WACC is a weighted average, so it always lands between the after-tax cost of debt and the cost of equity. It drops below the after-tax cost of debt only if equity looks cheaper than debt, which usually means an input is wrong; the calculator flags that. WACC can still be below the pre-tax borrowing rate, because interest saves tax.
Yes. After you see your result, you can download a free Excel model. Every output is a live formula, with WACC, DCF, sensitivity and notes tabs, so you can see how each figure is built.
Illustrative only. This WACC Calculator is a learning tool, not investment advice or a recommendation to buy or sell any security. Market inputs are dated and change often; see Official sources above.
