TORNTPOWER.NS WACC - Weighted Average Cost of Capital

The WACC of Torrent Power Ltd (TORNTPOWER.NS) is 13.8%.

The Cost of Equity of Torrent Power Ltd (TORNTPOWER.NS) is 14.90%.

The Cost of Debt of Torrent Power Ltd (TORNTPOWER.NS) is 8.70%.

	Range	Selected
Cost of equity	11.60% - 18.20%	14.90%
Tax rate	23.40% - 27.50%	25.45%
Cost of debt	8.30% - 9.10%	8.70%
WACC	10.9% - 16.6%	13.8%

WACC

TORNTPOWER.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.57	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	18.20%

Tax rate	23.40%	27.50%
Debt/Equity ratio	0.15	0.15
Cost of debt	8.30%	9.10%

After-tax WACC	10.9%	16.6%


Selected WACC	13.8%

TORNTPOWER.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 TORNTPOWER.NS:

cost_of_equity (14.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.57) + 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.