TATAPOWER.NS WACC - Weighted Average Cost of Capital
The WACC of Tata Power Company Ltd (TATAPOWER.NS) is 13.7%.
| Range | Selected | |
| Cost of equity | 14.9% - 19.4% | 17.15% |
| Tax rate | 25.3% - 27.3% | 26.3% |
| Cost of debt | 8.0% - 8.1% | 8.05% |
| WACC | 12.1% - 15.2% | 13.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.97 | 1.24 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.9% | 19.4% |
| Tax rate | 25.3% | 27.3% |
| Debt/Equity ratio | 0.45 | 0.45 |
| Cost of debt | 8.0% | 8.1% |
| After-tax WACC | 12.1% | 15.2% |
| Selected WACC | 13.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TATAPOWER.NS | Tata Power Company Ltd | 0.45 | 1.58 | 1.18 |
| 002608.SZ | Jiangsu Guoxin Corp Ltd | 1.57 | 1.03 | 0.47 |
| ADANITRANS.NS | Adani Transmission Ltd | 0.34 | 0.83 | 0.66 |
| CESC.NS | CESC Ltd | 0.7 | 1.46 | 0.96 |
| DPSCLTD.NS | India Power Corporation Ltd | 0.19 | 1.45 | 1.27 |
| ENERGYDEV.NS | Energy Development Company Ltd | 1.84 | 1.14 | 0.48 |
| FEES.ME | FSK YeES PAO | 2.13 | 0.05 | 0.02 |
| POWERGRID.NS | Power Grid Corporation of India Ltd | 0.46 | 1.01 | 0.75 |
| SJVN.NS | SJVN Ltd | 0.58 | 1.59 | 1.11 |
| TORNTPOWER.NS | Torrent Power Ltd | 0.17 | 1.27 | 1.13 |
| Low | High | |
| Unlevered beta | 0.71 | 1.02 |
| Relevered beta | 0.96 | 1.36 |
| Adjusted relevered beta | 0.97 | 1.24 |
TATAPOWER.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 TATAPOWER.NS:
cost_of_equity (17.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.97) + 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.