TATACHEM.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Chemicals Ltd (TATACHEM.NS) is 13.7%.

The Cost of Equity of Tata Chemicals Ltd (TATACHEM.NS) is 15.70%.

The Cost of Debt of Tata Chemicals Ltd (TATACHEM.NS) is 7.30%.

	Range	Selected
Cost of equity	14.60% - 16.80%	15.70%
Tax rate	17.00% - 23.00%	20.00%
Cost of debt	5.50% - 9.10%	7.30%
WACC	12.5% - 14.8%	13.7%

WACC

TATACHEM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.93	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.60%	16.80%

Tax rate	17.00%	23.00%
Debt/Equity ratio	0.26	0.26
Cost of debt	5.50%	9.10%

After-tax WACC	12.5%	14.8%


Selected WACC	13.7%

TATACHEM.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 TATACHEM.NS:

cost_of_equity (15.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.93) + 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.