NTPC.NS WACC - Weighted Average Cost of Capital

The WACC of NTPC Ltd (NTPC.NS) is 13.1%.

The Cost of Equity of NTPC Ltd (NTPC.NS) is 17.75%.

The Cost of Debt of NTPC Ltd (NTPC.NS) is 8.85%.

	Range	Selected
Cost of equity	16.30% - 19.20%	17.75%
Tax rate	24.90% - 26.20%	25.55%
Cost of debt	7.20% - 10.50%	8.85%
WACC	11.7% - 14.4%	13.1%

WACC

NTPC.NS WACC calculation

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	16.30%	19.20%

Tax rate	24.90%	26.20%
Debt/Equity ratio	0.73	0.73
Cost of debt	7.20%	10.50%

After-tax WACC	11.7%	14.4%


Selected WACC	13.1%

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.