Reverse DCF
Find the free-cash-flow growth a company’s current market value already assumes, so you can judge whether that growth is likely instead of inventing a growth rate to justify a price.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Market value
The market capitalisation in ₹ crore — or enterprise value if the company carries meaningful net debt, since lenders have a claim on the same cash flow.
- Free cash flow, this year
Operating cash flow minus capital expenditure, in ₹ crore. Use a normal year, or an average of several — a single unusually good or bad year distorts everything that follows.
- High-growth years
How long the company is assumed to grow faster than the economy before settling down. Ten years is a common, already generous, choice.
- Discount rate
The return you require for owning this business — its cost of equity, or WACC if you entered enterprise value. A higher rate means the price needs more growth to be fair.
- Growth after that
The permanent growth rate once the fast phase ends. Keep it near long-run nominal GDP growth; it must be below the discount rate.
Worked example: ₹50,000 crore company, ₹1,500 crore free cash flow
A company valued at ₹50,000 crore generated ₹1,500 crore of free cash flow this year. You require 12% a year and assume 5% growth forever after a ten-year fast phase.
What to enter
- Market value
- ₹50,000 Cr
- Free cash flow, this year
- ₹1,500 Cr
- High-growth years
- 10 yrs
- Discount rate
- 12%
- Growth after that
- 5%
What it shows you
- Implied growth / yr
- ≈ 15.9%
- Cash flow in year 10
- ≈ ₹6,579 Cr
- Price ÷ cash flow
- 33.3×
- Value from terminal
- ≈ 64%
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Fundamental Analysis12 minReverse DCF: what the price already assumesInstead of forecasting and getting a value, take the price and solve for the forecast. It turns valuation into a question you can actually answer.
- Fundamental Analysis12 minDiscounted cash flowBuild a valuation from first principles, then watch how badly it wobbles — which is the actual lesson.
- Fundamental Analysis11 minRelative valuation and the margin of safetyComparing a company to its peers and to its own history — faster than a DCF, easier to abuse, and how to decide what discount you actually need.
- Fundamental Analysis12 minThe two-stage DCF: high growth now, normal growth laterReal companies grow fast for a while, then settle down — and a single-growth DCF cannot capture that. How the two-stage model splits the future into an explicit forecast and a terminal value.
- Fundamental Analysis10 minGraham net-nets: buying a company for less than its cashBenjamin Graham’s deepest bargain: a stock priced below the liquidation value of its current assets alone, fixed assets thrown in free. How NCAV works, the two-thirds rule, and why they are so rare.