PONNIERODE.NS WACC - Weighted Average Cost of Capital

The WACC of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 12.3%.

The Cost of Equity of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 18.20%.

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

	Range	Selected
Cost of equity	15.20% - 21.20%	18.20%
Tax rate	12.40% - 15.70%	14.05%
Cost of debt	7.50% - 7.50%	7.50%
WACC	10.9% - 13.7%	12.3%

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	1.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.20%	21.20%

Tax rate	12.40%	15.70%
Debt/Equity ratio	1	1
Cost of debt	7.50%	7.50%

After-tax WACC	10.9%	13.7%


Selected WACC	12.3%

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 (18.20%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1) + 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.