TATAELXSI.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Elxsi Ltd (TATAELXSI.NS) is 17.0%.

The Cost of Equity of Tata Elxsi Ltd (TATAELXSI.NS) is 17.10%.

The Cost of Debt of Tata Elxsi Ltd (TATAELXSI.NS) is 5.75%.

	Range	Selected
Cost of equity	15.40% - 18.80%	17.10%
Tax rate	24.10% - 25.20%	24.65%
Cost of debt	4.00% - 7.50%	5.75%
WACC	15.3% - 18.7%	17.0%

WACC

TATAELXSI.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.02	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.40%	18.80%

Tax rate	24.10%	25.20%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	7.50%

After-tax WACC	15.3%	18.7%


Selected WACC	17.0%

TATAELXSI.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 TATAELXSI.NS:

cost_of_equity (17.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.02) + 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.