Disclaimer!
- The information, results, or outputs generated by this calculator do not constitute research reports, investment advice, portfolio management, or financial product distribution under the Securities and Exchange Board of India (SEBI) Act, 1992 or any related regulations.
- This calculator is not registered with SEBI as a Research Analyst (RA) or Investment Adviser (IA) and does not claim to provide recommendations under the SEBI (Research Analysts) Regulations, 2014 or SEBI (Investment Advisers) Regulations, 2013.
- This calculator is not affiliated with the Reserve Bank of India (RBI), and the content herein does not constitute guidance on banking, lending, deposits, or financial instruments governed by RBI.
- Users must ensure compliance with applicable laws, including SEBI, RBI, and other regulatory authorities, before making any financial decisions.
- Financial markets involve risk. Intrinsic Value is one of many factors in investing and should not be relied upon solely. Market conditions, industry trends, and personal financial goals must also be considered.
- The calculator results are based on user inputs. We do not make warranties regarding the accuracy, completeness, reliability, or timeliness of the output.
- By using this website and clicking “I Accept”, you acknowledge that you will consult a SEBI-registered financial adviser before acting on any investment decision.
- Neither the authors nor the operators of this website shall be held liable for losses, damages, or claims arising from the use of this calculator.
By browsing this website and/or using the calculator, you confirm and agree that:
- You have read and understood this disclaimer.
- You agree to use the calculator strictly for personal educational purposes.
- You will not hold the website, its authors, or affiliates responsible for any decision or loss resulting from reliance on the calculator’s results.
How to use the calculator
Step 1: Enter last 5 years of cash flow (including current year) in the cash flow column.
Step 2: Enter no. of outstanding shares for same 5 years i.e. no. of equity shares or free float.
Step: Click “Calculate Intrinsic Value” button. It will calculate the intrinsic value of the share using discounted cash flow method.
Read FAQs for important information
Intrinsic Value Calculator
| Year | Cash Flow (In ₹) | Shares Outstanding (In numbers) |
|---|---|---|
| Year 1 | ||
| Year 2 | ||
| Year 3 | ||
| Year 4 | ||
| Year 5 |
FAQs
Q 1: What are the assumptions used in the intrinsic value (IV) calculation?
Ans: Discounting rate: 10.83%; Growth rate: 8%. The discounting rate is the weighted average cost of capital for a company. For simplicity, we've used a standard rate for all calculations across industries. Also, any change would complicate the calculations and won't make a meaningful difference.
Q 2: What does intrinsic value indicate? How can I use it?
Ans: It indicates a company's true value expressed in per share. It is compared with the current market price (CMP) to determine by what margin is the share price overvalued or undervalued. For e.g. if the IV is 155 and CMP is 100, the share price is undervalued. The company should be further studied for investment purposes. If the IV is 155 and CMP is 205, the share price is overvalued.
Q 3: Can I use this calculator for Banking sector as well?
Ans: No, the current version applies to non-banking companies only. We will add a separate calculator for banks based on user response.
Q 4: How does the calculator respond to companies with negative cash flow?
Ans: The calculator will return a negative IV i.e. the company is financially not strong enough to generate cash flow.
Q 5: Is it an absolute indicator to buy or sell a share?
Ans: No, the IV is one of the many indicators to determine the fair value of a share.
Q 6: Can I use it for intraday trading or speculation?
Ans: No, the IV should only be used for long-term investing to reap the benefits of compounding, identify great buying opportunities during market correction, and to generate better tax-adjusted returns.
Q 7: How is Price-Earnings ratio (PE) and Intrinsic Value related?
Ans: The PE ratio indicates how expensive a share is compared to its earning per share i.e. how many INR investors are willing to pay for 1 INR of company's profit i.e. if the PE is 25, the investors are willing to pay 25 INR for 1 INR of profit. As per Warren Buffet, any company with PE above 25 is not worth buying. IV indicates the fair value price of a share based on discounted future cash flow (based on past cash flow trend). Hence, it can be directly compared with the CMP to take informed decisions.
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