UTTAMSUGAR.NS WACC - Weighted Average Cost of Capital

The WACC of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 11.7%.

The Cost of Equity of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 15.80%.

The Cost of Debt of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 8.10%.

	Range	Selected
Cost of equity	14.30% - 17.30%	15.80%
Tax rate	25.70% - 26.60%	26.15%
Cost of debt	7.10% - 9.10%	8.10%
WACC	10.6% - 12.9%	11.7%

WACC

UTTAMSUGAR.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.9	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	17.30%

Tax rate	25.70%	26.60%
Debt/Equity ratio	0.71	0.71
Cost of debt	7.10%	9.10%

After-tax WACC	10.6%	12.9%


Selected WACC	11.7%

UTTAMSUGAR.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 UTTAMSUGAR.NS:

cost_of_equity (15.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.9) + 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.