TATACHEM.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Chemicals Ltd (TATACHEM.NS) is 13.8%.

The Cost of Equity of Tata Chemicals Ltd (TATACHEM.NS) is 15.85%.

The Cost of Debt of Tata Chemicals Ltd (TATACHEM.NS) is 7.80%.

	Range	Selected
Cost of equity	14.80% - 16.90%	15.85%
Tax rate	25.10% - 31.50%	28.30%
Cost of debt	5.60% - 10.00%	7.80%
WACC	12.7% - 14.9%	13.8%

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	0.95	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.80%	16.90%

Tax rate	25.10%	31.50%
Debt/Equity ratio	0.25	0.25
Cost of debt	5.60%	10.00%

After-tax WACC	12.7%	14.9%


Selected WACC	13.8%

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 (15.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.95) + 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.