TATACOFFEE.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Coffee Ltd (TATACOFFEE.NS) is 12.4%.

The Cost of Equity of Tata Coffee Ltd (TATACOFFEE.NS) is 13.75%.

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

	Range	Selected
Cost of equity	11.70% - 15.80%	13.75%
Tax rate	25.40% - 27.20%	26.30%
Cost of debt	4.70% - 8.60%	6.65%
WACC	10.5% - 14.4%	12.4%

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	0.58	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.70%	15.80%

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

After-tax WACC	10.5%	14.4%


Selected WACC	12.4%

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 (13.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.58) + 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.