NOVARTIND.NS WACC - Weighted Average Cost of Capital
The WACC of Novartis India Ltd (NOVARTIND.NS) is 12.0%.
| Range | Selected | |
| Cost of equity | 11.0% - 13.2% | 12.1% |
| Tax rate | 28.0% - 41.3% | 34.65% |
| Cost of debt | 7.9% - 7.9% | 7.9% |
| WACC | 10.9% - 13.1% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.43 | 0.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.0% | 13.2% |
| Tax rate | 28.0% | 41.3% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 7.9% | 7.9% |
| After-tax WACC | 10.9% | 13.1% |
| Selected WACC | 12.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NOVARTIND.NS | Novartis India Ltd | 0.01 | 0.88 | 0.88 |
| 506414.BO | Fermenta Biotech Ltd | 0.18 | 0.35 | 0.32 |
| AMRUTANJAN.NS | Amrutanjan Health Care Ltd | 0 | 0.85 | 0.85 |
| BLISSGVS.NS | Bliss GVS Pharma Ltd | 0.08 | 1.69 | 1.61 |
| GUFICBIO.NS | Gufic Biosciences Ltd | 0.02 | 1.03 | 1.02 |
| LINCOLN.NS | Lincoln Pharmaceuticals Ltd | 0 | 1.92 | 1.92 |
| MANGALAM.NS | Mangalam Drugs and Organics Ltd | 0.93 | 1.1 | 0.71 |
| RPGLIFE.NS | RPG Life Sciences Ltd | 0.85 | 1.1 | 0.73 |
| SMSPHARMA.NS | SMS Pharmaceuticals Ltd | 0.13 | 1.63 | 1.51 |
| VENUSREM.NS | Venus Remedies Ltd | 0.1 | 0.9 | 0.85 |
| Low | High | |
| Unlevered beta | 0.85 | 0.93 |
| Relevered beta | 0.15 | 0.27 |
| Adjusted relevered beta | 0.43 | 0.51 |
NOVARTIND.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 NOVARTIND.NS:
cost_of_equity (12.10%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (0.43) + 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.