TATACOFFEE.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Coffee Ltd (TATACOFFEE.NS) is 12.7%.

The Cost of Equity of Tata Coffee Ltd (TATACOFFEE.NS) is 14.00%.

The Cost of Debt of Tata Coffee Ltd (TATACOFFEE.NS) is 6.65%.

	Range	Selected
Cost of equity	11.40% - 16.60%	14.00%
Tax rate	25.40% - 27.20%	26.30%
Cost of debt	4.70% - 8.60%	6.65%
WACC	10.3% - 15.1%	12.7%

WACC

TATACOFFEE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.55	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	16.60%

Tax rate	25.40%	27.20%
Debt/Equity ratio	0.17	0.17
Cost of debt	4.70%	8.60%

After-tax WACC	10.3%	15.1%


Selected WACC	12.7%

TATACOFFEE.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 TATACOFFEE.NS:

cost_of_equity (14.00%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.55) + 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.