MTNL.NS WACC - Weighted Average Cost of Capital

The WACC of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 9.0%.

The Cost of Equity of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 21.30%.

The Cost of Debt of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 7.95%.

	Range	Selected
Cost of equity	16.60% - 26.00%	21.30%
Tax rate	-% - 0.10%	0.05%
Cost of debt	7.00% - 8.90%	7.95%
WACC	7.8% - 10.2%	9.0%

WACC

MTNL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.17	1.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.60%	26.00%

Tax rate	-%	0.10%
Debt/Equity ratio	11.53	11.53
Cost of debt	7.00%	8.90%

After-tax WACC	7.8%	10.2%


Selected WACC	9.0%

MTNL.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 MTNL.NS:

cost_of_equity (21.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.17) + 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.