What is the Intrinsic Value Calculator (DCF Method)?
The Intrinsic Value Calculator based on the Discounted Cash Flow (DCF) method helps investors estimate the fair value of a stock by projecting its future free cash flows and discounting them back to their present value.
This tool is ideal for value investors who want to determine whether a stock is undervalued, fairly valued, or overvalued compared to its current market price.
It’s especially useful for Indian retail investors who aim to invest in quality companies with a margin of safety.
How to Use the Intrinsic Value Calculator (DCF)
- Enter the Expected Free Cash Flow (FCF): Input the most recent FCF from the company’s financials.
- Set the Growth Rate: Estimate how much you expect FCF to grow annually (5–15% is typical for stable Indian companies).
- Select the Discount Rate: This is the rate of return you require, often 10–12% for Indian investors.
- Set the Terminal Growth Rate: Usually between 2% and 5% to represent the perpetual growth after your forecast period.
- Choose Forecast Period: Typically 5 to 10 years.
- Click “Calculate”: The tool will compute the intrinsic value of the stock.
Compare the intrinsic value to the stock’s current market price to make informed investment decisions.
Benefits of the Intrinsic Value Calculator
- Unbiased Valuation: Focuses on future cash flow instead of market hype.
- Data-Driven Investing: Make logical decisions based on financial modeling, not emotions.
- Margin of Safety: Know when you're buying at a discount to intrinsic value.
- Long-Term Focus: Ideal for investors holding fundamentally strong stocks over years.
- Identify Undervalued Gems: Spot undervalued Indian stocks early with DCF analysis.
Who Should Use This Tool?
- Beginner Indian investors learning value investing fundamentals.
- Intermediate traders assessing stocks for long-term portfolios.
- Stock market enthusiasts comparing intrinsic value with market price.
- Finance students practicing discounted cash flow analysis.
FAQs – Intrinsic Value Calculator (DCF)
1. What is intrinsic value in stock investing?
Intrinsic value is the estimated true value of a company based on its fundamentals, like future cash flows, rather than current stock market price.
2. What is the Discounted Cash Flow (DCF) method?
DCF values a business by forecasting its future free cash flows and discounting them to present value using a required rate of return.
3. Where can I find Free Cash Flow data for Indian stocks?
You can access FCF data from annual reports, investor presentations, or financial websites like Screener.in, Moneycontrol, and TickerTape.
4. What is a good discount rate for Indian stocks?
A discount rate of 10–12% is commonly used by Indian investors to factor in inflation, market risk, and desired return.
5. Is this calculator suitable for all stock types?
It works best for companies with stable and predictable cash flows, such as FMCG, IT, banking, or blue-chip Indian stocks.
Start Valuing Stocks Like a Pro
Use our Intrinsic Value Calculator (DCF) to make smart, long-term investment decisions with confidence.
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