Loading article...
Loading article...
Stream/Area:
-
Subject:
-
Paper ID:
IJSREM67978
Volume:
10 |
10 |
Oct 2026
Pages:
1-9
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Mangement
Lovely professional university
Mangement
Lovely professional university
Mangement
Lovely professional university
Mangement
Lovely professional university
Mangement
Lovely professional university
Mangement
Lovely professional university
This study estimates the cost of equity (Ke), cost of debt (Kd) and WACC of Hitachi Energy India Limited, formerly ABB Power Products and Systems India Limited, over five reporting periods from FY 2021–22 to FY 2025–26, and benchmarks the results against ABB India Limited and Siemens Limited. Ke was estimated through CAPM with a Blume-adjusted beta, Kd through both the effective interest rate method and a rating-based method, and WACC using book and market weights. Ke ranged between 11.56% and 12.29%. Book-value WACC rose from 10.93% to 11.76%, while market-value WACC stayed between about 11.6% and 12.3%, as debt fell to below 2% of capital. The effective interest rate method produced implausible pre-tax rates of 20.6% to 37.0% for a AAA-rated firm, so the rating-based estimate of 5.4% to 5.8% after tax was adopted. At current market data, its WACC (12.02%) was close to ABB India's (11.79%) and below the RBSA capital goods benchmark of 13.9%, while the higher Siemens estimate (15.05%) reflects a demerger-distorted beta. The company's financing followed pecking order behaviour in normal periods but departed from it through a large equity issue in March 2025, which is consistent with market timing.
KEYWORDS
The WACC of Hitachi Energy India was about 11% to 12% over FY 2021–22 to FY 2025–26 and converged on its cost of equity as debt fell to almost zero. Its financing fits the pecking order and market timing theories better than the trade-off theory. The study is limited by the use of a single 5-year beta for all periods, an assumed equity risk premium and credit spread, an annualised 15-month first period, bounded rather than exact market values for three years, and the demerger-affected Siemens beta. Future research could include Siemens Energy India and GE Vernova T&D India and test multi-factor models of the cost of equity.
ABB India Limited. (2026). Annual report 2025. https://www.bseindia.com/xml-data/corpfiling/AttachHis/3e1f777e-4988-48f8-b545-f788c673245c.pdf Bajaj Finserv. (2026). Hitachi Energy India Ltd share price. https://www.bajajfinserv.in/investments/powerindia-share-price Baker, M., & Wurgler, J. (2002). Market timing and capital structure. The Journal of Finance, 57(1), 1–32. https://doi.org/10.1111/1540-6261.00414 Berk, J., & DeMarzo, P. (2020). Corporate finance (5th ed.). Pearson. Bhaduri, S. N. (2002). Determinants of capital structure choice: A study of the Indian corporate sector. Applied Financial Economics, 12(9), 655–665. https://doi.org/10.1080/09603100010017705 Blume, M. E. (1971). On the assessment of risk. The Journal of Finance, 26(1), 1–10. https://doi.org/10.1111/j.1540-6261.1971.tb00584.x Central Electricity Authority. (2024). National electricity plan (Volume II: Transmission). Ministry of Power, Government of India. https://cea.nic.in Chakraborty, I. (2010). Capital structure in an emerging stock market: The case of India. Research in International Business and Finance, 24(3), 295–314. https://doi.org/10.1016/j.ribaf.2010.02.001 CompaniesMarketCap. (2026). Hitachi Energy India market capitalization history. https://companiesmarketcap.com/hitachi-energy-india/marketcap/ CRISIL Ratings. (2025). Rating rationale: Hitachi Energy India Limited. https://www.crisil.com Damodaran, A. (2020). Equity risk premiums (ERP): Determinants, estimation and implications – The 2020 edition. SSRN. https://doi.org/10.2139/ssrn.3550293
Publication Date
10/14/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
Documents
Article Views
1
Total views since publication
PDF Downloads
7
Total downloads since publication
Geographic Reach
5
Digital Preservation: This article is permanently archived on Zenodo and complies with all data preservation standards across major indexing platforms.
Plagiarism Screening
This manuscript has been checked for plagiarism using TurnitinPlagiarismChecker software.
Conflict of Interest
The authors declare no conflict of interest related to this research work.
Funding Information
No funding information available for this research.
Related research in the same subject area
Loading similar articles...