NTPC.NS WACC - Weighted Average Cost of Capital
The WACC of NTPC Ltd (NTPC.NS) is 13.1%.
| Range | Selected | |
| Cost of equity | 16.3% - 19.2% | 17.75% |
| Tax rate | 24.9% - 26.2% | 25.55% |
| Cost of debt | 7.2% - 10.5% | 8.85% |
| WACC | 11.7% - 14.4% | 13.1% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.14 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.3% | 19.2% |
| Tax rate | 24.9% | 26.2% |
| Debt/Equity ratio | 0.73 | 0.73 |
| Cost of debt | 7.2% | 10.5% |
| After-tax WACC | 11.7% | 14.4% |
| Selected WACC | 13.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NTPC.NS | NTPC Ltd | 0.73 | 1.07 | 0.69 |
| 532874.BO | Suryachakra Power Corp Ltd | 3.42 | 0.82 | 0.23 |
| 601991.SS | Datang International Power Generation Co Ltd | 3.18 | 0.97 | 0.29 |
| ADANIPOWER.NS | Adani Power Ltd | 0.18 | 0.71 | 0.63 |
| GIPCL.NS | Gujarat Industries Power Company Ltd | 0.18 | 1.76 | 1.55 |
| JSWENERGY.NS | JSW Energy Ltd | 0.35 | 1.06 | 0.84 |
| NLCINDIA.NS | NLC India Ltd | 0.71 | 1.86 | 1.22 |
| PTC.NS | PTC India Ltd | 0.82 | 1.42 | 0.88 |
| RPOWER.NS | Reliance Power Ltd | 0.69 | 2.01 | 1.32 |
| RTNPOWER.NS | RattanIndia Power Ltd | 0.45 | 1.13 | 0.85 |
| Low | High | |
| Unlevered beta | 0.78 | 0.86 |
| Relevered beta | 1.21 | 1.33 |
| Adjusted relevered beta | 1.14 | 1.22 |
NTPC.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 NTPC.NS:
cost_of_equity (17.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.14) + 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.