TATASTLBSL.NS WACC - Weighted Average Cost of Capital

The WACC of Tata Steel BSL Ltd (TATASTLBSL.NS) is 16.5%.

The Cost of Equity of Tata Steel BSL Ltd (TATASTLBSL.NS) is 24.15%.

The Cost of Debt of Tata Steel BSL Ltd (TATASTLBSL.NS) is 10.20%.

	Range	Selected
Cost of equity	22.20% - 26.10%	24.15%
Tax rate	-% - 6.00%	3.00%
Cost of debt	9.80% - 10.60%	10.20%
WACC	15.6% - 17.5%	16.5%

WACC

TATASTLBSL.NS WACC calculation

Category	Low	High

Long-term bond rate	7.5%	8.0%
Equity market risk premium	6.9%	7.9%
Adjusted beta	2.12	2.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	22.20%	26.10%

Tax rate	-%	6.00%
Debt/Equity ratio	1.15	1.15
Cost of debt	9.80%	10.60%

After-tax WACC	15.6%	17.5%


Selected WACC	16.5%

TATASTLBSL.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 TATASTLBSL.NS:

cost_of_equity (24.15%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (2.12) + 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.