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Annual top-line growth over the forecast horizon
Operating margin held constant across the forecast
Weighted average cost of capital used to discount FCF
Perpetual growth rate applied after the forecast
- Intrinsic
- ₹1,125.92
- Market Price
- ₹1,047.20
- Margin of Safety
- 7.0%
- Confidence
- Low
BUY ≥ +15%, SELL ≤ −10%, HOLD otherwise. Confidence reflects intrinsic-value spread under ±1pp WACC / terminal-growth shocks.
Investment Summary
Analyst ViewBased on the current assumptions, the intrinsic value is ₹1,125.92 per share compared with a market price of ₹1,047.20, implying a upside of 7.5%. Over a 5-year horizon at a 10.5% WACC and 3.5% terminal growth, enterprise value is ₹ 4,39,474 Cr and equity value is ₹ 4,55,654 Cr. Under these assumptions the stock appears fairly valued and receives a HOLD recommendation.
Analyst Brief
₹1,125.92 intrinsic vs ₹1,047.20 market — HOLD
Deterministic commentary derived from the current DCF assumptions and outputs.
Valuation Summary
The base-case DCF produces an intrinsic value of ₹1,125.92 per share, implying an upside of 7.5% versus a market price of ₹1,047.20. Enterprise value stands at ₹ 4,39,474 Cr and equity value at ₹ 4,55,654 Cr, with 73% of enterprise value sitting in the terminal component under a Gordon Growth framework.
Key Assumptions Summary
The model runs a 5-year explicit forecast at 7.0% revenue growth, 21.0% EBIT margin and a 26.0% effective tax rate. Cash conversion is calibrated with 3.0% D&A, 3.2% capex and 15.0% working-capital intensity (all as % of revenue). Cash flows are discounted at a 10.5% WACC, with terminal value captured via 3.5% perpetuity growth.
Key Value Drivers
Valuation is driven primarily by WACC (14.3% swing on a ±1pp move), D&A (% Revenue) (6.7% swing on a ±1pp move), and Capex (% Revenue) (6.7% swing on a ±1pp move). A ±1pp move in wacc alone moves intrinsic value by 14.3%, which is why marginal changes in this input dominate the story.
| Driver | Shock | Impact | Direction |
|---|---|---|---|
| WACC | ±1pp | 14.3% | |
| D&A (% Revenue) | ±1pp | 6.7% | |
| Capex (% Revenue) | ±1pp | 6.7% | |
| Terminal Growth | ±0.5pp | 5.4% | |
| EBIT Margin | ±1pp | 5.0% | |
| Revenue Growth | ±1pp | 3.1% | |
| Forecast Horizon | ±1 yr | 2.4% | |
| Tax Rate | ±1pp | 1.4% | |
| Working Capital (% Rev.) | ±1pp | 0.4% |
Valuation Interpretation
The explicit forecast contributes 27% and the terminal 73% of enterprise value — a balanced mix typical of mature growth names. A net-cash position of ₹ 16,180 Cr accretes to equity holders on top of enterprise value. On the current share count of 4046.9 million, this maps to an intrinsic per share of ₹1,125.92.
Sensitivity Commentary
Under ±1pp shocks to WACC and terminal growth, intrinsic value swings by roughly 54.0%. This places model confidence at low. The model is highly sensitive — treat the intrinsic value as one point in a wide distribution and rely on the sensitivity table for decisions.
Margin of Safety Analysis
The margin of safety, defined as (intrinsic − market) / intrinsic, stands at 7.0%. This falls into the thin band: A margin below 10% is fragile — small shifts in WACC, growth, or margin can flip the case.
Recommendation Explanation
The model returns a HOLD because upside of 7.5% sits inside the ±15%/−10% neutral band. The market and the model broadly agree on fair value under these assumptions.
- Upside vs market: +7.5% — thresholds are BUY at ≥ +15%, SELL at ≤ −10%, HOLD otherwise.
- Margin of safety is 7.0%, categorised as thin.
- Model confidence is low given a 54.0% spread under standard shocks.
- The call is most exposed to WACC, which alone accounts for a 14.3% swing on a ±1pp move.
Model Quality Check
The model passes structural integrity with 1 warning: terminal value dependence. Outputs are usable but sensitive to the flagged items.
Comfortable 7.0pp spread between WACC and terminal growth.
73.5% of enterprise value sits in the terminal — typical for growth names but worth stress-testing terminal assumptions.
5-year explicit horizon is standard for institutional DCFs.
Terminal FCF/EBITDA of 60% indicates healthy cash conversion.
Capex and D&A are within 5pp — consistent with a mature reinvestment profile.
All structural checks pass and outputs are defined.
Reference price present — upside and recommendation are computable.
Revenue Forecast
Explicit revenue trajectory with implied growth path
- Revenue
- Growth %
EBIT Forecast
Operating profit trajectory alongside EBITDA
- EBITDA
- EBIT
EBIT Margin
Operating profitability as % of revenue
- EBIT margin
- EBITDA margin
- Assumption
Free Cash Flow
NOPAT + D&A − Capex − ΔNWC
- Positive FCF
- Negative FCF
Discounted Cash Flow
Undiscounted FCF vs. present value each year
- Nominal FCF
- Present value
Terminal Value Contribution
73.5% of enterprise value sits in the terminal component
- Explicit forecast
- Terminal
- PV Explicit FCF₹ 1,16,574 Cr26.5%
- PV Terminal₹ 3,22,900 Cr73.5%
Enterprise Value Waterfall
Bridge from present values to equity
- PV explicit
- PV terminal
- Net debt
- Equity
Present Value Contribution
Share of enterprise value contributed by each forecast year plus the terminal
- PV explicit year
- PV terminal (final year)
Sensitivity Heatmap
Intrinsic value / share as WACC and terminal growth flex around baseline
| WACC ↓ / g → | 2.50% | 3.00% | 3.50% | 4.00% | 4.50% |
|---|---|---|---|---|---|
| 9.00% | ₹1,251.03 | ₹1,331.77 | ₹1,427.20 | ₹1,541.71 | ₹1,681.66 |
| 9.75% | ₹1,123.22 | ₹1,185.83 | ₹1,258.45 | ₹1,343.71 | ₹1,445.20 |
| 10.50% | ₹1,019.44 | ₹1,069.13 | ₹1,125.92 | ₹1,191.45 | ₹1,267.90 |
| 11.25% | ₹933.50 | ₹973.70 | ₹1,019.09 | ₹1,070.74 | ₹1,130.03 |
| 12.00% | ₹861.18 | ₹894.22 | ₹931.15 | ₹972.69 | ₹1,019.78 |
Historical Financials
Illustrative 5-year track record · INR Crores · returns in %
| Metric | Y-5 | Y-4 | Y-3 | Y-2 | Y-1 |
|---|---|---|---|---|---|
| Revenue | 1,27,375 | 1,36,291 | 1,45,832 | 1,56,040 | 1,66,963 |
| EBITDA | 30,570 | 32,710 | 35,000 | 37,450 | 40,071 |
| EBIT | 26,749 | 28,621 | 30,625 | 32,768 | 35,062 |
| PAT | 19,794 | 21,180 | 22,662 | 24,249 | 25,946 |
| Free Cash Flow | 18,289 | 19,570 | 20,940 | 22,405 | 23,974 |
| ROE | 20.8% | 22.3% | 23.9% | 25.5% | 27.3% |
| ROCE | 19.8% | 21.2% | 22.7% | 24.2% | 25.9% |
DCF Waterfall
Step-by-step build from present-value cash flows to intrinsic value per share.
- 1PV of Explicit FCFs₹ 1,16,574 Cr
- +PV of Terminal ValueGordon Growth · g = 3.5%₹ 3,22,900 Cr
- 3Enterprise Value₹ 4,39,474 Cr
- −Less: Net Debt₹ -16,180 Cr
- 5Equity Value₹ 4,55,654 Cr
- ÷÷ Shares Outstandingmillions of shares4,046.94 M
- =Intrinsic Value / Share₹1,125.92
Projection Detail
Values in INR Crores · FCF = NOPAT + D&A − Capex − ΔNWC
| Year | Revenue | EBIT | NOPAT | + D&A | − Capex | − ΔNWC | FCF | PV |
|---|---|---|---|---|---|---|---|---|
| Y1 | 1,91,156 | 40,143 | 29,706 | 5,735 | 6,117 | 1,876 | 27,447 | 24,839 |
| Y2 | 2,04,536 | 42,953 | 31,785 | 6,136 | 6,545 | 2,007 | 29,369 | 24,053 |
| Y3 | 2,18,854 | 45,959 | 34,010 | 6,566 | 7,003 | 2,148 | 31,425 | 23,291 |
| Y4 | 2,34,174 | 49,176 | 36,391 | 7,025 | 7,494 | 2,298 | 33,624 | 22,553 |
| Y5 | 2,50,566 | 52,619 | 38,938 | 7,517 | 8,018 | 2,459 | 35,978 | 21,839 |