NOVARTIND.NS WACC - Weighted Average Cost of Capital

The WACC of Novartis India Ltd (NOVARTIND.NS) is 12.0%.

The Cost of Equity of Novartis India Ltd (NOVARTIND.NS) is 12.10%.

The Cost of Debt of Novartis India Ltd (NOVARTIND.NS) is 7.90%.

	Range	Selected
Cost of equity	11.00% - 13.20%	12.10%
Tax rate	28.00% - 41.30%	34.65%
Cost of debt	7.90% - 7.90%	7.90%
WACC	10.9% - 13.1%	12.0%

WACC

NOVARTIND.NS WACC calculation

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	11.00%	13.20%

Tax rate	28.00%	41.30%
Debt/Equity ratio	0.01	0.01
Cost of debt	7.90%	7.90%

After-tax WACC	10.9%	13.1%


Selected WACC	12.0%

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.