UJJIVANSFB.NS WACC - Weighted Average Cost of Capital

The WACC of Ujjivan Small Finance Bank Ltd (UJJIVANSFB.NS) is 12.4%.

The Cost of Equity of Ujjivan Small Finance Bank Ltd (UJJIVANSFB.NS) is 15.30%.

The Cost of Debt of Ujjivan Small Finance Bank Ltd (UJJIVANSFB.NS) is 5.00%.

	Range	Selected
Cost of equity	13.20% - 17.40%	15.30%
Tax rate	24.40% - 24.70%	24.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	10.8% - 13.9%	12.4%

WACC

UJJIVANSFB.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.76	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	17.40%

Tax rate	24.40%	24.70%
Debt/Equity ratio	0.34	0.34
Cost of debt	5.00%	5.00%

After-tax WACC	10.8%	13.9%


Selected WACC	12.4%

UJJIVANSFB.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 UJJIVANSFB.NS:

cost_of_equity (15.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.76) + 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.