PONNIERODE.NS WACC - Weighted Average Cost of Capital

The WACC of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 12.4%.

The Cost of Equity of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 18.70%.

The Cost of Debt of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 7.50%.

	Range	Selected
Cost of equity	15.60% - 21.80%	18.70%
Tax rate	15.30% - 19.00%	17.15%
Cost of debt	7.50% - 7.50%	7.50%
WACC	10.9% - 13.9%	12.4%

WACC

PONNIERODE.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.05	1.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.60%	21.80%

Tax rate	15.30%	19.00%
Debt/Equity ratio	1	1
Cost of debt	7.50%	7.50%

After-tax WACC	10.9%	13.9%


Selected WACC	12.4%

PONNIERODE.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 PONNIERODE.NS:

cost_of_equity (18.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.05) + 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.