Cost of equity in India is stable, reflecting maturity and resilience: EY survey

The average cost of equity in India is stable at 14.2 per cent, up by about 40 basis points since 2021, indicating strong resilience, according to a survey by global consultancy firm EY.

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It also noted that the equity market risk premium has steadily shrunk over the past surveys. Despite global economic challenges, India's robust macroeconomic fundamentals and fiscal prudence have helped to maintain a relatively stable cost of equity. Theoretically, the cost of equity is the return that a company must realize in exchange for a given investment or project. In the survey outcome of The India Cost of Capital Survey 2024, EY said e-commerce, real estate, and IT/ITES sectors report the highest costs of capital reflecting their higher risk profiles and growth expectations. Conversely, sectors like power, chemicals, and Media & Entertainment feature at the lower end, benefiting from more stable cash flows. In a rapidly evolving economic landscape, understan