PONNIERODE.NS WACC - Weighted Average Cost of Capital

The WACC of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 11.1%.

The Cost of Equity of Ponni Sugars (Erode) Ltd (PONNIERODE.NS) is 15.95%.

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

	Range	Selected
Cost of equity	14.40% - 17.50%	15.95%
Tax rate	15.30% - 19.00%	17.15%
Cost of debt	7.50% - 7.50%	7.50%
WACC	10.4% - 11.8%	11.1%

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	0.91	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.40%	17.50%

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

After-tax WACC	10.4%	11.8%


Selected WACC	11.1%

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 (15.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.91) + 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.