SPARC.NS WACC - Weighted Average Cost of Capital

The WACC of Sun Pharma Advanced Research Co Ltd (SPARC.NS) is 17.8%.

The Cost of Equity of Sun Pharma Advanced Research Co Ltd (SPARC.NS) is 18.50%.

The Cost of Debt of Sun Pharma Advanced Research Co Ltd (SPARC.NS) is 9.55%.

	Range	Selected
Cost of equity	16.90% - 20.10%	18.50%
Tax rate	-% - -%	-%
Cost of debt	7.50% - 11.60%	9.55%
WACC	16.2% - 19.4%	17.8%

WACC

SPARC.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.21	1.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.90%	20.10%

Tax rate	-%	-%
Debt/Equity ratio	0.08	0.08
Cost of debt	7.50%	11.60%

After-tax WACC	16.2%	19.4%


Selected WACC	17.8%

SPARC.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 SPARC.NS:

cost_of_equity (18.50%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.21) + 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.