TATAMOTORS.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Motors Ltd (TATAMOTORS.NS) is 14.6%.

The Cost of Equity of Tata Motors Ltd (TATAMOTORS.NS) is 17.25%.

The Cost of Debt of Tata Motors Ltd (TATAMOTORS.NS) is 7.10%.

	Range	Selected
Cost of equity	15.70% - 18.80%	17.25%
Tax rate	23.80% - 27.00%	25.40%
Cost of debt	6.30% - 7.90%	7.10%
WACC	13.3% - 15.9%	14.6%

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	1.06	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.70%	18.80%

Tax rate	23.80%	27.00%
Debt/Equity ratio	0.28	0.28
Cost of debt	6.30%	7.90%

After-tax WACC	13.3%	15.9%


Selected WACC	14.6%

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 (17.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.06) + 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.