TFL.NS WACC - Weighted Average Cost of Capital

The WACC of Transwarranty Finance Ltd (TFL.NS) is 11.8%.

The Cost of Equity of Transwarranty Finance Ltd (TFL.NS) is 10.15%.

The Cost of Debt of Transwarranty Finance Ltd (TFL.NS) is 15.40%.

	Range	Selected
Cost of equity	9.10% - 11.20%	10.15%
Tax rate	0.30% - 0.80%	0.55%
Cost of debt	12.20% - 18.60%	15.40%
WACC	10.1% - 13.5%	11.8%

WACC

TFL.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.27	0.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.20%

Tax rate	0.30%	0.80%
Debt/Equity ratio	0.47	0.47
Cost of debt	12.20%	18.60%

After-tax WACC	10.1%	13.5%


Selected WACC	11.8%

TFL.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 TFL.NS:

cost_of_equity (10.15%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.27) + 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.