MTNL.NS WACC - Weighted Average Cost of Capital

The WACC of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 9.4%.

The Cost of Equity of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 19.60%.

The Cost of Debt of Mahanagar Telephone Nigam Ltd (MTNL.NS) is 8.25%.

	Range	Selected
Cost of equity	17.50% - 21.70%	19.60%
Tax rate	-% - -%	-%
Cost of debt	7.00% - 9.50%	8.25%
WACC	8.1% - 10.8%	9.4%

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	1.28	1.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.50%	21.70%

Tax rate	-%	-%
Debt/Equity ratio	8.67	8.67
Cost of debt	7.00%	9.50%

After-tax WACC	8.1%	10.8%


Selected WACC	9.4%

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 (19.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.28) + 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.