TORNTPOWER.NS WACC - Weighted Average Cost of Capital
The WACC of Torrent Power Ltd (TORNTPOWER.NS) is 15.2%.
| Range | Selected | |
| Cost of equity | 14.2% - 18.7% | 16.45% |
| Tax rate | 17.8% - 21.8% | 19.8% |
| Cost of debt | 8.6% - 10.0% | 9.3% |
| WACC | 13.2% - 17.2% | 15.2% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.88 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.2% | 18.7% |
| Tax rate | 17.8% | 21.8% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 8.6% | 10.0% |
| After-tax WACC | 13.2% | 17.2% |
| Selected WACC | 15.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TORNTPOWER.NS | Torrent Power Ltd | 0.16 | 1.53 | 1.35 |
| ADANITRANS.NS | Adani Transmission Ltd | 0.34 | 0.83 | 0.65 |
| CEN.NZ | Contact Energy Ltd | 0.26 | 0.83 | 0.68 |
| CESC.NS | CESC Ltd | 0.63 | 1.5 | 0.99 |
| DPSCLTD.NS | India Power Corporation Ltd | 0.16 | 1.8 | 1.59 |
| ENERGYDEV.NS | Energy Development Company Ltd | 1.47 | 0.83 | 0.38 |
| GNE.NZ | Genesis Energy Ltd | 0.56 | 0.67 | 0.46 |
| POWERGRID.NS | Power Grid Corporation of India Ltd | 0.46 | 1.03 | 0.75 |
| SJVN.NS | SJVN Ltd | 0.53 | 1.91 | 1.33 |
| TATAPOWER.NS | Tata Power Company Ltd | 0.42 | 1.69 | 1.26 |
| Low | High | |
| Unlevered beta | 0.72 | 1.1 |
| Relevered beta | 0.82 | 1.24 |
| Adjusted relevered beta | 0.88 | 1.16 |
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 (16.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.88) + 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.