DCF Valuation Calculator
Estimate the intrinsic value of a business by discounting 5 years of projected free cash flow plus a terminal value back to today at the company's weighted average cost of capital.
Assumptions
Implied equity value per share
₹185.66
Enterprise Value
₹19,066 cr
Equity Value
₹18,566 cr
PV explicit
₹4,866 cr
PV terminal
₹14,200 cr
74% of EV
| Year | FCF (₹ cr) | Discount factor | PV of FCF |
|---|---|---|---|
| Year 1 | 1,100 | 1.110 | 991 |
| Year 2 | 1,210 | 1.232 | 982 |
| Year 3 | 1,331 | 1.368 | 973 |
| Year 4 | 1,464 | 1.518 | 964 |
| Year 5 | 1,611 | 1.685 | 956 |
| Terminal Value (yr 5) | 23,928 | 1.685 | 14,200 |
How a DCF works
A DCF says the value of a business today equals the sum of every future cash flow it will produce, discounted to today at a rate that reflects its risk. In practice, we forecast 5–10 years explicitly, then capture everything after that as a single terminal value using the Gordon Growth formula. Add explicit + terminal PVs → Enterprise Value. Subtract net debt → Equity Value. Divide by shares → per-share intrinsic value.
The formulas
EV = Σ FCFₜ / (1+WACC)ᵗ + TV / (1+WACC)⁵TV = FCF₅ × (1+g) / (WACC − g)- FCF
- Free cash flow to firm = EBIT(1-t) + D&A − Capex − ΔWC
- WACC
- Weighted avg. cost of capital (debt + equity)
- g
- Terminal (long-run) growth rate, ≤ nominal GDP
- EV
- Enterprise Value
Worked example
Suppose a company generated ₹1,000 cr of FCF last year, grows it 10% for 5 years, WACC = 11%, terminal growth = 4%. Year-5 FCF ≈ ₹1,611 cr → TV = 1,611 × 1.04 / (0.11 − 0.04) ≈ ₹23,935 cr. PV of explicit FCFs ≈ ₹4,540 cr; PV of TV ≈ ₹14,201 cr. EV ≈ ₹18,741 cr. Subtract ₹500 cr net debt → Equity ≈ ₹18,241 cr → ~₹182/share on 100 cr shares.
Interview-ready pro tips
- Terminal value usually contributes 65–80% of EV don't obsess over Year-1 FCF, obsess over WACC and g.
- Cross-check TV using an exit multiple (EV/EBITDA of 8–12x) the Gordon and exit-multiple methods should be within 15%.
- Always run a sensitivity table: WACC vs terminal growth. Recruiters love asking "what happens if WACC + 100 bps?".
- Use mid-year convention in real models discount by (t − 0.5) instead of t. Adds ~5% to EV.
Common mistakes
- Using unlevered FCF but discounting at cost of equity (Ke). Match the cash flow to the rate.
- Setting terminal growth > long-run GDP (~5% India, ~2.5% US) implies the firm becomes bigger than the economy.
- Forgetting to subtract net debt to move from Enterprise to Equity value.
- Double-counting synergies, or projecting margin expansion forever without competitive justification.
Go deeper
Educational simulation. Not a valuation opinion. Do not use for investment decisions.