AARVI.NS WACC - Weighted Average Cost of Capital

The WACC of Aarvi Encon Ltd (AARVI.NS) is 12.7%.

The Cost of Equity of Aarvi Encon Ltd (AARVI.NS) is 12.25%.

The Cost of Debt of Aarvi Encon Ltd (AARVI.NS) is 17.75%.

	Range	Selected
Cost of equity	10.20% - 14.30%	12.25%
Tax rate	7.00% - 8.60%	7.80%
Cost of debt	7.80% - 27.70%	17.75%
WACC	9.8% - 15.7%	12.7%

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	0.4	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.20%	14.30%

Tax rate	7.00%	8.60%
Debt/Equity ratio	0.14	0.14
Cost of debt	7.80%	27.70%

After-tax WACC	9.8%	15.7%


Selected WACC	12.7%

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 (12.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.4) + 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.