TATASTEEL.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Steel Ltd (TATASTEEL.NS) is 14.8%.

The Cost of Equity of Tata Steel Ltd (TATASTEEL.NS) is 19.10%.

The Cost of Debt of Tata Steel Ltd (TATASTEEL.NS) is 8.85%.

	Range	Selected
Cost of equity	17.70% - 20.50%	19.10%
Tax rate	30.00% - 30.00%	30.00%
Cost of debt	7.20% - 10.50%	8.85%
WACC	13.5% - 16.1%	14.8%

WACC

TATASTEEL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.31	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.70%	20.50%

Tax rate	30.00%	30.00%
Debt/Equity ratio	0.49	0.49
Cost of debt	7.20%	10.50%

After-tax WACC	13.5%	16.1%


Selected WACC	14.8%

TATASTEEL.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 TATASTEEL.NS:

cost_of_equity (19.10%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.31) + 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.