What is DCF Intrinsic Value Calculator?
Calculate intrinsic value of any stock using the Discounted Cash Flow (DCF) model with customizable growth assumptions Simply enter your values, and the calculator instantly computes accurate results using standard financial formulas. All calculations are performed entirely in your browser — nothing is stored or transmitted.
Formula Used
FCF = Free Cash Flow | g = Growth rate | r = Discount rate (WACC or required return) | t = Year | Terminal value captures cash flows beyond forecast period assuming stable growth.
How to Use This Calculator
- Enter the company's current Free Cash Flow (from cash flow statement)
- Enter expected growth rate for next 5-10 years
- Enter terminal growth rate (typically 3-5%, GDP growth rate)
- Enter discount rate (your required rate of return, typically 12-15%)
- Click Calculate to see per-share intrinsic value and margin of safety
Worked Example
FCF: ₹500 Cr | Growth: 15% for 10 yrs then 5% | Discount Rate: 12% | Shares: 100 Cr → Intrinsic Value: ₹180/share | If price ₹130: 28% margin of safety
Why Use This Tool?
- Find fundamentally undervalued stocks using cash flow approach
- Calculate margin of safety before investing
- Sensitivity analysis shows how value changes with growth assumptions
- Warren Buffett's preferred valuation method
Frequently Asked Questions
What is DCF (Discounted Cash Flow) valuation?
DCF is a valuation method that estimates the intrinsic value of a business by discounting projected future free cash flows to their present value. The idea: money received in the future is worth less than money today (time value of money). DCF is the gold standard of fundamental valuation.
What discount rate should I use for DCF?
The discount rate should reflect your required rate of return — typically 12-15% for Indian equities. Professional analysts use WACC (Weighted Average Cost of Capital). For conservative valuation, use 15%. Higher discount rates give lower intrinsic values (more conservative).
What is margin of safety in DCF?
Margin of safety is the discount between the intrinsic value and the current market price. If DCF gives ₹200 intrinsic value and the stock trades at ₹140, margin of safety is 30%. Benjamin Graham recommended buying only at 30-50% margin of safety to protect against calculation errors.
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