DCF calculator: intrinsic value from free cash flow
A discounted cash flow (DCF) valuation says a business is worth the cash it will produce in the future, discounted back to today. This DCF calculator projects free cash flow through two growth stages, adds a terminal value for everything after the forecast, discounts it all at your required return and divides by the number of shares to give an intrinsic value per share. Compare it with the market price to see your margin of safety.
It works for Indian stocks with amounts in lakh or crore and for US or UK companies in millions or billions. You choose free cash flow to the firm (discounted at WACC, then net debt is subtracted) or free cash flow to equity (discounted at the cost of equity), and a Gordon-growth or exit-multiple terminal value. A sensitivity table shows how the value moves with the discount rate and the terminal assumption, and a CAPM/WACC helper suggests a discount rate.
How to use the DCF / Intrinsic Value Calculator
- Choose FCFF or FCFE and your currency.
- Enter the latest (or normalised) free cash flow, the unit amounts are in, net debt, and the shares outstanding with their unit.
- Set the growth rate and years for stage 1 and for a slower stage 2 (0 years skips it).
- Enter the discount rate, or open Work out the discount rate and press Use as the discount rate.
- Pick Gordon growth with a terminal growth rate or Exit multiple of final-year cash flow.
- Optionally enter the share price and the margin of safety you want; read the value, the forecast table and the sensitivity grid.
DCF / Intrinsic Value Calculator features
Two-stage projection
A high-growth stage and a fade stage before the terminal value.
Two terminal methods
Gordon growth (with the implied exit multiple) or an exit multiple (with the implied perpetual growth).
FCFF or FCFE
Enterprise value less net debt, or equity value directly.
Sensitivity grid
Value per share for discount rates ±2 points against terminal growth ±1 point or multiple ±4.
Margin of safety
How far today’s price sits below or above the value, and a buy-below price.
The DCF formula
Value = Σ FCFt ÷ (1 + r)t + TV ÷ (1 + r)N, with the Gordon terminal value TV = FCFN × (1 + g) ÷ (r − g). For FCFF, equity = enterprise value − net debt; intrinsic value per share = equity ÷ shares; margin of safety = (value − price) ÷ value. Cash flows are discounted at the end of each year.
Example: a company with ₹1,000 crore of free cash flow, growing 12% for five years and 8% for five more, discounted at 12% with 5% terminal growth, ₹2,000 crore of net debt and 100 crore shares. The ten years of cash flow are worth ₹9,489 crore today and the terminal value ₹12,506 crore, so the enterprise value is ₹21,995 crore, equity ₹19,995 crore and the intrinsic value ₹199.95 a share. At a price of ₹180 the margin of safety is about 10%. The terminal value is 57% of the total, which is typical — and why the long-run assumption matters so much.
Choosing the inputs
- Free cash flow: cash from operations minus capital expenditure. Use an average of several years if the last one was unusual; the calculator needs a positive starting figure.
- Discount rate: CAPM gives the cost of equity as risk-free rate + beta × equity risk premium; WACC blends it with the after-tax cost of debt. Indian valuations often use 11–14%, US large companies 7–10% — but use your own required return.
- Terminal growth: should not exceed long-run nominal economic growth; 4–6% is common for India, 2–3% for the US and UK. It must be below the discount rate.
- Exit multiple: a multiple of final-year free cash flow (not EBITDA). Check the implied growth it assumes.
When a DCF misleads
Banks, insurers and early-stage companies with negative or erratic cash flow are hard to value this way. A DCF also cannot know about dilution, cyclical peaks or one-off cash flows unless you adjust for them. For dividend-paying shares, compare with the income view in the dividend calculator; to check the growth a stock has actually delivered, use the CAGR calculator.
DCF / Intrinsic Value Calculator FAQ
How do I calculate intrinsic value with a DCF?
Project the free cash flow for each year, discount each year at your required return, add the discounted terminal value, subtract net debt and divide by the number of shares. The DCF calculator does every step and shows the table.
What discount rate should I use in a DCF?
Your required return: WACC for free cash flow to the firm, the cost of equity for free cash flow to equity. The built-in CAPM and WACC helper gives a starting point.
Can I use this DCF calculator for Indian stocks?
Yes. Enter amounts in crore or lakh and shares in crore or lakh; the result is in rupees per share with Indian digit grouping.
What is a good margin of safety?
Value investors often look for 20–40% below their estimate of intrinsic value, to allow for mistakes in the assumptions.
Why does the terminal value dominate?
Because it covers every year after the forecast. That is why the sensitivity table matters: test a range rather than trusting one number.
Is the intrinsic value a price target?
No. It is the value implied by your assumptions. Change them and the value changes; it is a calculation, not investment advice.