TNPETRO.NS WACC - Weighted Average Cost of Capital

The WACC of Tamilnadu Petroproducts Ltd (TNPETRO.NS) is 14.4%.

The Cost of Equity of Tamilnadu Petroproducts Ltd (TNPETRO.NS) is 17.95%.

The Cost of Debt of Tamilnadu Petroproducts Ltd (TNPETRO.NS) is 10.85%.

	Range	Selected
Cost of equity	16.40% - 19.50%	17.95%
Tax rate	24.30% - 24.90%	24.60%
Cost of debt	7.80% - 13.90%	10.85%
WACC	12.6% - 16.2%	14.4%

WACC

TNPETRO.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.15	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	19.50%

Tax rate	24.30%	24.90%
Debt/Equity ratio	0.57	0.57
Cost of debt	7.80%	13.90%

After-tax WACC	12.6%	16.2%


Selected WACC	14.4%

TNPETRO.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 TNPETRO.NS:

cost_of_equity (17.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.15) + 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.