AIAENG.NS
AIA Engineering Ltd
Price:  
3,300 
INR
Volume:  
22,773
India | Machinery

AIAENG.NS WACC - Weighted Average Cost of Capital

The WACC of AIA Engineering Ltd (AIAENG.NS) is 16.1%.

The Cost of Equity of AIA Engineering Ltd (AIAENG.NS) is 15.85%.
The Cost of Debt of AIA Engineering Ltd (AIAENG.NS) is 40.4%.

RangeSelected
Cost of equity14.3% - 17.4%15.85%
Tax rate22.5% - 22.5%22.5%
Cost of debt7.5% - 73.3%40.4%
WACC14.2% - 17.9%16.1%
WACC

AIAENG.NS WACC calculation

CategoryLowHigh
Long-term bond rate6.9%7.4%
Equity market risk premium8.3%9.3%
Adjusted beta0.91.02
Additional risk adjustments0.0%0.5%
Cost of equity14.3%17.4%
Tax rate22.5%22.5%
Debt/Equity ratio
0.010.01
Cost of debt7.5%73.3%
After-tax WACC14.2%17.9%
Selected WACC16.1%

AIAENG.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 AIAENG.NS:

cost_of_equity (15.85%) = 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.