NATCOPHARM.NS WACC - Weighted Average Cost of Capital

The WACC of Natco Pharma Ltd (NATCOPHARM.NS) is 13.0%.

The Cost of Equity of Natco Pharma Ltd (NATCOPHARM.NS) is 13.30%.

The Cost of Debt of Natco Pharma Ltd (NATCOPHARM.NS) is 7.70%.

	Range	Selected
Cost of equity	12.20% - 14.40%	13.30%
Tax rate	16.60% - 17.00%	16.80%
Cost of debt	7.50% - 7.90%	7.70%
WACC	11.9% - 14.1%	13.0%

WACC

NATCOPHARM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.65	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.20%	14.40%

Tax rate	16.60%	17.00%
Debt/Equity ratio	0.05	0.05
Cost of debt	7.50%	7.90%

After-tax WACC	11.9%	14.1%


Selected WACC	13.0%

NATCOPHARM.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 NATCOPHARM.NS:

cost_of_equity (13.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.65) + 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.