UTTAMSUGAR.NS WACC - Weighted Average Cost of Capital

The WACC of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 11.0%.

The Cost of Equity of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 14.55%.

The Cost of Debt of Uttam Sugar Mills Ltd (UTTAMSUGAR.NS) is 8.40%.

	Range	Selected
Cost of equity	12.90% - 16.20%	14.55%
Tax rate	25.70% - 31.20%	28.45%
Cost of debt	7.70% - 9.10%	8.40%
WACC	9.9% - 12.0%	11.0%

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	0.73	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.90%	16.20%

Tax rate	25.70%	31.20%
Debt/Equity ratio	0.72	0.72
Cost of debt	7.70%	9.10%

After-tax WACC	9.9%	12.0%


Selected WACC	11.0%

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 (14.55%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.73) + 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.