TORNTPHARM.NS WACC - Weighted Average Cost of Capital

The WACC of Torrent Pharmaceuticals Ltd (TORNTPHARM.NS) is 13.3%.

The Cost of Equity of Torrent Pharmaceuticals Ltd (TORNTPHARM.NS) is 13.60%.

The Cost of Debt of Torrent Pharmaceuticals Ltd (TORNTPHARM.NS) is 7.10%.

	Range	Selected
Cost of equity	12.60% - 14.60%	13.60%
Tax rate	25.00% - 30.80%	27.90%
Cost of debt	6.40% - 7.80%	7.10%
WACC	12.3% - 14.3%	13.3%

WACC

TORNTPHARM.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.69	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.60%	14.60%

Tax rate	25.00%	30.80%
Debt/Equity ratio	0.04	0.04
Cost of debt	6.40%	7.80%

After-tax WACC	12.3%	14.3%


Selected WACC	13.3%

TORNTPHARM.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 TORNTPHARM.NS:

cost_of_equity (13.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.69) + 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.