SONATSOFTW.NS WACC - Weighted Average Cost of Capital

The WACC of Sonata Software Ltd (SONATSOFTW.NS) is 16.2%.

The Cost of Equity of Sonata Software Ltd (SONATSOFTW.NS) is 16.95%.

The Cost of Debt of Sonata Software Ltd (SONATSOFTW.NS) is 7.40%.

	Range	Selected
Cost of equity	15.50% - 18.40%	16.95%
Tax rate	25.50% - 27.90%	26.70%
Cost of debt	7.30% - 7.50%	7.40%
WACC	14.9% - 17.5%	16.2%

WACC

SONATSOFTW.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.04	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.50%	18.40%

Tax rate	25.50%	27.90%
Debt/Equity ratio	0.07	0.07
Cost of debt	7.30%	7.50%

After-tax WACC	14.9%	17.5%


Selected WACC	16.2%

SONATSOFTW.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 SONATSOFTW.NS:

cost_of_equity (16.95%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.04) + 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.