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Enter free cash flow, growth, WACC, net debt and shares. Get value per share.
Free cash flow to the firm (FCFF) = EBIT (operating profit) × (1 − tax) + D&A (depreciation and amortisation) − capex (asset spending) − change in working capital.
The short version
Quick answer: A DCF (discounted cash flow) values future cash at the WACC (weighted average cost of capital). Example: ₹100 crore of cash flow grows 12% in years 1–5, then 8% in years 6–10. With a 12% WACC, 5% terminal growth, ₹150 crore net debt and 10 crore shares: ₹204.95 a share (illustrative).
Guide
From cash flow to value per share
A DCF values a business by its future cash, not its share price. It forecasts free cash flow, then shrinks each future rupee to today's value. Money later is worth less than money now. The total is the intrinsic value: what the company is worth on its own numbers.
It is like pricing a flat by its rent. If rent is ₹3 lakh a year, you would not pay ₹3 crore. You pay what all future rent is worth today (illustrative).
DCF suits steady, cash-generating firms. It suits banks and NBFCs (non-banking financial companies) poorly, because for lenders debt is raw material.
FCFF is the cash left after running costs, taxes and the investment needed to grow. It belongs to lenders and shareholders together, so you discount it at WACC (weighted average cost of capital).
FCFF = EBIT × (1 − tax rate) + D&A − capex − change in working capital. EBIT is operating profit, before interest and tax. D&A (depreciation and amortisation) is a non-cash cost. Capex is spending on long-lived assets. Find EBIT in the profit and loss statement, D&A and capex in the cash flow statement.
Example: EBIT ₹160 crore, 25% tax, ₹30 crore D&A, ₹45 crore capex, ₹5 crore more working capital. FCFF = 160 × 0.75 + 30 − 45 − 5 = ₹100 crore (illustrative).
Use a higher rate for years 1–5 if the business is expanding, then a lower rate as it matures. Base growth on drivers you can defend, such as volumes, prices or capacity.
Terminal growth is the rate the company can keep up forever. It must stay below WACC, because the formula divides by (WACC − g). Damodaran's rule of thumb keeps it at or below the risk-free rate. For rupee models, the ≈10-year G-Sec (Government of India bond) yield (7.29% on 8 Oct 2026, RBI) is a sensible ceiling.
Terminal value covers every year after year 10, so it often makes up half or more of enterprise value. Small changes in WACC or terminal growth swing the answer. Always read the sensitivity grid.
| Value per share (illustrative) | g = 4% | g = 5% | g = 6% |
|---|---|---|---|
| WACC 11% | ₹220.06 | ₹244.16 | ₹277.91 |
| WACC 12% | ₹188.28 | ₹204.95 | ₹227.18 |
| WACC 13% | ₹163.68 | ₹175.65 | ₹191.04 |
In short: one point on WACC or growth moves value by about ₹17 to ₹39 per share, so quote a range.
Enterprise value is the worth of the whole business, owed to lenders and shareholders. Subtract net debt (borrowings minus cash) to get equity value. Net cash adds to it. Then divide by shares outstanding: ₹ crore ÷ crore shares gives ₹ per share.
Full models also subtract minority interest (outside owners' share of subsidiaries) and add spare investments. Fold those into net debt here.
It grows your base-year FCFF for ten years at two rates and discounts each year at your WACC. It adds a terminal value for the years after year 10. Then it subtracts net debt and divides by shares.
PV means present value. It uses end-of-year discounting; a mid-year convention gives a slightly higher value.
| Step (illustrative example) | Value |
|---|---|
| Base-year FCFF | ₹100.0 crore |
| PV of FCFF, years 1–10, at a 12% WACC | ₹948.9 crore |
| Terminal value at year 10 (5% growth) | ₹3,884.2 crore |
| PV of the terminal value | ₹1,250.6 crore |
| Enterprise value | ₹2,199.5 crore |
| Less net debt | ₹150.0 crore |
| Equity value | ₹2,049.5 crore |
| Value per share (10 crore shares) | ₹204.95 |
In short: 57% of this value comes from the terminal value, so growth and WACC matter most.
FAQs
A DCF calculator estimates what a company is worth today from the cash it should generate in future. You enter free cash flow, growth rates, WACC, net debt and shares. It returns enterprise value, equity value and an intrinsic value per share, plus a grid showing how that value changes with your assumptions.
Use a WACC built from the company's own risk and mix of debt and equity. With the October 2026 defaults, a company with a beta of 1.0 has a cost of equity of about 14.21%. That uses 7.29% for the 10-year G-Sec and Damodaran's 6.92% India equity risk premium (July 2026 update). Work out your rate in the free WACC Calculator; this page pre-fills it on the same device.
Keep it modest and below WACC. A common guide from Professor Aswath Damodaran is that stable growth should not exceed the risk-free rate, which was 7.29% for the 10-year G-Sec on 8 Oct 2026. Test a few rates in the sensitivity grid before you settle on one.
Most of a DCF's value sits far in the future, and discounting compounds over many years. The terminal value also divides by WACC minus growth, which is a small number. In the illustrative example on this page, cutting WACC from 12% to 11% lifts value per share from ₹204.95 to ₹244.16.
Yes. After you see your result, you can download a free Excel model with a live formula on every output line. It has WACC, DCF, sensitivity and notes tabs, so you can rebuild the valuation step by step.
Illustrative only. This DCF Calculator is a learning tool. It is not investment advice, a target price or a recommendation to buy or sell any security. Every company figure is an assumption you enter; market references are dated (see Official sources above).
