NTPC.NS WACC - Weighted Average Cost of Capital

The WACC of NTPC Ltd (NTPC.NS) is 12.4%.

The Cost of Equity of NTPC Ltd (NTPC.NS) is 16.75%.

The Cost of Debt of NTPC Ltd (NTPC.NS) is 8.60%.

	Range	Selected
Cost of equity	15.00% - 18.50%	16.75%
Tax rate	24.90% - 26.20%	25.55%
Cost of debt	6.70% - 10.50%	8.60%
WACC	10.8% - 14.0%	12.4%

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	0.98	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.00%	18.50%

Tax rate	24.90%	26.20%
Debt/Equity ratio	0.73	0.73
Cost of debt	6.70%	10.50%

After-tax WACC	10.8%	14.0%


Selected WACC	12.4%

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 (16.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.98) + 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.