AARVI.NS WACC - Weighted Average Cost of Capital

The WACC of Aarvi Encon Ltd (AARVI.NS) is 12.5%.

The Cost of Equity of Aarvi Encon Ltd (AARVI.NS) is 12.30%.

The Cost of Debt of Aarvi Encon Ltd (AARVI.NS) is 16.05%.

	Range	Selected
Cost of equity	10.10% - 14.50%	12.30%
Tax rate	2.50% - 4.40%	3.45%
Cost of debt	7.90% - 24.20%	16.05%
WACC	9.9% - 15.0%	12.5%

WACC

AARVI.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.38	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.10%	14.50%

Tax rate	2.50%	4.40%
Debt/Equity ratio	0.06	0.06
Cost of debt	7.90%	24.20%

After-tax WACC	9.9%	15.0%


Selected WACC	12.5%

AARVI.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 AARVI.NS:

cost_of_equity (12.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.38) + 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.