TATACOMM.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Communications Ltd (TATACOMM.NS) is 12.3%.

The Cost of Equity of Tata Communications Ltd (TATACOMM.NS) is 14.20%.

The Cost of Debt of Tata Communications Ltd (TATACOMM.NS) is 6.25%.

	Range	Selected
Cost of equity	12.80% - 15.60%	14.20%
Tax rate	19.70% - 22.60%	21.15%
Cost of debt	4.40% - 8.10%	6.25%
WACC	10.8% - 13.7%	12.3%

WACC

TATACOMM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.71	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.80%	15.60%

Tax rate	19.70%	22.60%
Debt/Equity ratio	0.26	0.26
Cost of debt	4.40%	8.10%

After-tax WACC	10.8%	13.7%


Selected WACC	12.3%

TATACOMM.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 TATACOMM.NS:

cost_of_equity (14.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.71) + 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.