TATACHEM.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Chemicals Ltd (TATACHEM.NS) is 12.3%.

The Cost of Equity of Tata Chemicals Ltd (TATACHEM.NS) is 14.15%.

The Cost of Debt of Tata Chemicals Ltd (TATACHEM.NS) is 9.40%.

	Range	Selected
Cost of equity	13.00% - 15.30%	14.15%
Tax rate	16.90% - 23.30%	20.10%
Cost of debt	6.70% - 12.10%	9.40%
WACC	11.0% - 13.6%	12.3%

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	0.74	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.00%	15.30%

Tax rate	16.90%	23.30%
Debt/Equity ratio	0.37	0.37
Cost of debt	6.70%	12.10%

After-tax WACC	11.0%	13.6%


Selected WACC	12.3%

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 (14.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.74) + 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.