TATAMOTORS.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Motors Ltd (TATAMOTORS.NS) is 14.0%.

The Cost of Equity of Tata Motors Ltd (TATAMOTORS.NS) is 17.35%.

The Cost of Debt of Tata Motors Ltd (TATAMOTORS.NS) is 7.45%.

	Range	Selected
Cost of equity	15.80% - 18.90%	17.35%
Tax rate	19.30% - 23.50%	21.40%
Cost of debt	6.60% - 8.30%	7.45%
WACC	12.7% - 15.2%	14.0%

WACC

TATAMOTORS.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.07	1.18

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.80%	18.90%

Tax rate	19.30%	23.50%
Debt/Equity ratio	0.41	0.41
Cost of debt	6.60%	8.30%

After-tax WACC	12.7%	15.2%


Selected WACC	14.0%

TATAMOTORS.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 TATAMOTORS.NS:

cost_of_equity (17.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.07) + 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.