TECHM.NS WACC - Weighted Average Cost of Capital

The WACC of Tech Mahindra Ltd (TECHM.NS) is 13.6%.

The Cost of Equity of Tech Mahindra Ltd (TECHM.NS) is 13.75%.

The Cost of Debt of Tech Mahindra Ltd (TECHM.NS) is 8.15%.

	Range	Selected
Cost of equity	11.30% - 16.20%	13.75%
Tax rate	24.70% - 25.10%	24.90%
Cost of debt	7.50% - 8.80%	8.15%
WACC	11.2% - 16.1%	13.6%

WACC

TECHM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.53	0.9

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	16.20%

Tax rate	24.70%	25.10%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.50%	8.80%

After-tax WACC	11.2%	16.1%


Selected WACC	13.6%

TECHM.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 TECHM.NS:

cost_of_equity (13.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.53) + 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.