PARAGMILK.NS WACC - Weighted Average Cost of Capital

The WACC of Parag Milk Foods Ltd (PARAGMILK.NS) is 14.3%.

The Cost of Equity of Parag Milk Foods Ltd (PARAGMILK.NS) is 15.05%.

The Cost of Debt of Parag Milk Foods Ltd (PARAGMILK.NS) is 11.15%.

	Range	Selected
Cost of equity	13.90% - 16.20%	15.05%
Tax rate	5.00% - 7.50%	6.25%
Cost of debt	10.00% - 12.30%	11.15%
WACC	13.2% - 15.4%	14.3%

WACC

PARAGMILK.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.85	0.9

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.90%	16.20%

Tax rate	5.00%	7.50%
Debt/Equity ratio	0.19	0.19
Cost of debt	10.00%	12.30%

After-tax WACC	13.2%	15.4%


Selected WACC	14.3%

PARAGMILK.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 PARAGMILK.NS:

cost_of_equity (15.05%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.85) + 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.