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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM67984
Volume:
10 |
10 |
Oct 2026
Pages:
1-9
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Mittal School of Business
Lovely Professional University
Mittal School of Business
Lovely Professional University
Mittal School of Business
Lovely Professional University
Mittal School of Business
Lovely Professional University
In this research paper, the cost of capital of Oberoi Realty Limited, an Indian real estate developer, has been evaluated through quantitative descriptive case study. This study analyzes the company financial data collected in the provided research materials for financial years 2021-22 to 2025-26 and estimates weighted average cost of capital (WACC) for FY2025-26. In this paper, analysis includes revenue, finance cost, profit after tax, borrowings and equity, cost of debt from borrowings interest and average borrowings, cost of equity from Capital Asset Pricing Model (CAPM), and finally, combining both using capital weights. Considering a risk-free rate of 6.96%, beta of 0.66 and equity risk premium of 7.00%, cost of equity has been estimated at 11.58%. Estimated pre-tax cost of debt is 7.62% while after-tax is 5.83%. Using market value equity and book borrowings as debt, estimated indicative WACC is approximately 11.28%. Sensitivity analysis suggests that WACC lies approximately between 10.97% and 11.60% with variation in equity risk premium between 6.50% and 7.50%. From the results, it can be said that estimate is largely influenced by equity as it constitutes about 94.82% of capital base used. The results provided are not company-reported but rather calculated based on assumptions made on market data and taxes.
KEYWORDS
This report analyzed the cost of capital of Oberoi Realty Limited based on its financial trend over five years and FY2025-26 projection. The revenue from operations has risen from ₹2,693.97 crore in FY2021-22 to ₹6,009.06 crore in FY2025-26, whereas the profit after tax has grown from ₹1,047.10 crore to ₹2,507.43 crore. Finance cost went on increasing until FY2024-25 but fell to ₹240.63 crore in FY2025-26. Borrowings have come down from ₹3,300.40 crore in March 2025 to ₹2,816.23 crore in March 2026, whereas the debt-equity ratio has been reduced from 0.21 to 0.16. With the risk-free rate of 6.96%, beta of 0.66, and ERP of 7.00%, the estimated cost of equity would be 11.58%. The estimated pre-tax cost of debt will be 7.62% using interest of ₹233.10 crore and average debt of ₹3,058.31 crore, whereas after considering the 23.45% effective tax rate, the estimated after-tax cost of debt would be 5.83%. Using estimated market value of equity of ₹51,595.16 crore and borrowings of ₹2,816.23 crore, the WACC estimated by us would be around 11.28%. The sensitivity analysis shows the range of 10.97% – 11.60% based on ERP assumptions of 6.50% – 7.50%. In conclusion, the key takeaway from the estimation is that the WACC calculation is heavily biased towards equity since equity forms about 94.82% of the capital base considered. This WACC can be used in initial project evaluation of projects with similar risks, but it should be frequently revised and complemented with project-specific scenarios.
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Publication Date
10/14/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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