NHPC.NS WACC - Weighted Average Cost of Capital

The WACC of NHPC Ltd (NHPC.NS) is 12.5%.

The Cost of Equity of NHPC Ltd (NHPC.NS) is 14.80%.

The Cost of Debt of NHPC Ltd (NHPC.NS) is 8.55%.

	Range	Selected
Cost of equity	12.70% - 16.90%	14.80%
Tax rate	16.20% - 19.30%	17.75%
Cost of debt	6.60% - 10.50%	8.55%
WACC	10.6% - 14.5%	12.5%

WACC

NHPC.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.7	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	16.90%

Tax rate	16.20%	19.30%
Debt/Equity ratio	0.42	0.42
Cost of debt	6.60%	10.50%

After-tax WACC	10.6%	14.5%


Selected WACC	12.5%

NHPC.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 NHPC.NS:

cost_of_equity (14.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.7) + 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.