TVSMOTOR.NS WACC - Weighted Average Cost of Capital

The WACC of TVS Motor Company Ltd (TVSMOTOR.NS) is 13.9%.

The Cost of Equity of TVS Motor Company Ltd (TVSMOTOR.NS) is 15.85%.

The Cost of Debt of TVS Motor Company Ltd (TVSMOTOR.NS) is 5.75%.

	Range	Selected
Cost of equity	12.70% - 19.00%	15.85%
Tax rate	32.00% - 32.60%	32.30%
Cost of debt	4.00% - 7.50%	5.75%
WACC	11.1% - 16.7%	13.9%

WACC

TVSMOTOR.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.7	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	19.00%

Tax rate	32.00%	32.60%
Debt/Equity ratio	0.2	0.2
Cost of debt	4.00%	7.50%

After-tax WACC	11.1%	16.7%


Selected WACC	13.9%

TVSMOTOR.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 TVSMOTOR.NS:

cost_of_equity (15.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.7) + 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.