Free cash flow based Intrinsic Value Calculator

This Intrinsic value calculator can be used online for free. It uses the concept of free cash flow to estimate stock’s intrinsic value.

One day I was searching online, any intrinsic value calculator on web. I was surprised to see how less is available on the internet about intrinsic value.

Back in the past years, when I did my search, I could not find even one intrinsic value calculator.

So how small investors were estimating intrinsic value of their stocks?

Probably, they were either resorting to manual calculations or else, intrinsic value estimation was getting completely ignored.

This is only one side of story.

The other question that must be asked is, why experts were not publishing a reliable intrinsic value calculator online?

It is important to understand that, though coding an intrinsic value calculator is not tough, still authentic calculators are not available online, why?

To develop an intrinsic value calculator a combination of financial know how and programming skill is necessary.

This is a rare combination and hence intrinsic value calculators are rare to find on internet.

Finance people do not know programming skills. Programmers may not have the financial know-how. People who has both these skills are not many.

Moreover, people who has this skill may not be willing to part with this knowledge, leave aside publishing it on internet.

Online, there are plethora of financial calculators available. But why only intrinsic value calculator is so rare?

The root cause of this scarcity is the concept of intrinsic value itself.

It is a fact that the concept of precise intrinsic value calculation requires exception financial skills. Probably only handful people on this earth has this skill. One such personality known to us is Warren Buffett.

Common investors does not have investing abilities like Buffett, hence precise calculation of intrinsic value becomes difficult.

But even rough estimation of intrinsic value can be a very valuable information for stock investors.

How common men like us can estimate intrinsic value of stocks?

We can use a basic intrinsic value calculator as provided in this article.

#1. Intrinsic Value Calculator – Explained

We have developed this basic online intrinsic value calculator that can be used to approximately estimate intrinsic value of any stock.

The concept used here to estimate intrinsic value is very similar to DCF business valuation model.

We have tweaked the DCF model a little bit to make it user friendly for all.

Though this calculator is self-explanatory, but for first timers I will explain few terminologies used in the calculator.

#1.1 Risk Free Rate – The risk free rate is easily available on internet. On can google for the prevailing rate for 10 year government bond. Present risk free rate is 7.5%

#1.2 Expected Risk Premium – When one invests in equity, the expectation of returns are higher. The factor by which equity yields returns over and above the risk free rate is called as risk premium.

Suppose SENSEX averaged a return of 12% over last 5 years. Considering risk free rate as 7.77%, the risk premium that Sensex provided in last five years was 4.5% (12% – 7.5%)

#1.3 Stock Beta – Some stocks are more volatile than others. Some stocks are so stable that even during market crash, when SENSEX is tumbling down, these stocks show great resistance. Such stable stocks have beta less than one.

Stocks which are more volatile (compared to index) will have beta more than one.

The higher is the beta more volatile is the stock.

Individual stock’s beta value can be easily obtained online from websites like Economic Times, Reuters etc.

#1.4 Market Value of Equity – This is also called as Net Worth. This value is readily available in companies balance sheet.

Market value of equity is equal to share capital plus accumulated reserves.

One can also find this information on moneycontrol, Yahoo Finance, Bloomberg etc.

#1.5 Market Value of Debt – This value is also readily available in companies balance sheets (long term debt).

One cash also find this information on moneycontrol, Yahoo Finance, Bloomberg, etc.

#1.6 Number of Shares Outstanding in Market – This value is available in companies financial reports. In moneycontrol, it is available in profit and loss accounts.

#1.7 Free Cash Flow – Calculation of right free cash flow is essential for correct estimation of intrinsic value of stocks.

Free cash flow is not same as net profit minus dividends. Free cash is that cash that company can utilize to enhance shareholders valve.

You can use the below free cash flow calculator provided in this article to estimate free cash flow of any stock.

Revenue (Rs.Cr.)
Cost of Goods Sold (Rs.Cr.)
Income Tax Expense (Rs.Cr.)
Current Asset-Last Year (Rs.Cr.)
Current Liability-Last Year (Rs.Cr.)
Current Asset-Current Year (Rs.Cr.)
Current Liability-Current Year (Rs.Cr.)
Capital Expenditure Rs.Cr.
Depreciation Rs.Cr.
Free Cash FLow (FCF) Rs.Cr.

#1.8 Free Cash Flow Growth Rate for next 5 years – A reliable way to estimate free cash flow growth rate is by calculating free cash flow of last five years.

When one know free cash flow of last five years, calculating free cash flow growth for those 5 years is simple.

For simplicity, one can consider same growth rate for next 5 years in future.

#1.9 Terminal Growth Rate beyond the 5th year – In order to calculate ALL future free cash flows, it is not enough to estimate free cash flow of only next 5 years.

Terminal value helps to estimate ALL free cash flow from 6th year till end of life of company.

For simplicity sake, we can assume terminal growth rate of 3% per annum.

Intrinsic Value Calculator

Market Price (Rs.)
Risk Free Rate (R) % [Google for 10Y Govt.Bond Rate]
Expected Risk Premium (Rp) % [In India safest will be 5% above Risk Free Rate]
Stock Beta (B) [Search for it in]
Market Value of Equity (E) Rs.Cr. [Look for companies balance sheet in]
Market Value of Debt (D) Rs.Cr.[Look for companies balance sheet in]
Number of Shares Outstanding (S) [Lakhs-0.1Million] Nos.[Look for companies P/L in]
Free Cash Flow of Last FY (F) Rs.Cr.
Free Cash Flow Growth for next 5 Yrs (gf) %
Terminal Growth Rate beyond 5th Year (Tg) %
WACC (W) %

Disclaimer: All blog posts of are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyze all securities before investing in one.

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14 Comments on "Free cash flow based Intrinsic Value Calculator"

  1. Hi

    Gone through your post, but one thing i didn’t get. What is the purpose of IV, please explain in what you it helps..

  2. Sanjay Kumar Bhattacharyya | August 5, 2016 at 11:10 pm | Reply

    i want to subscribe -how

  3. IV calculator is a good work-out basically. Soon we can expect other financial ratios calculators too ? i cross-checked the IV so calculated with other such tools from other websites. It will be okay if errors do not creep in.

  4. Thank you very much. The calculator is working fine now……..

  5. Hello, I was going through your Intrinsic Value Calculator. For some reason, after inputting the relevant fields and on pressing the “Calculate IV” I don’t seem to get any result in the Intrinsic Value field. Kindly let me know what may be going wrong. Thanks, Tushar

  6. I like your articles very informative. Thanks for sharing and carry on this good work. Highly appreciable

  7. i like it

  8. Thanks for great article on Intrinsic Value and calculator. Could you please share any website from where we can get all parameters used in calculator, at one place.

  9. Awesome calculator. You did a great job. Seriously. Thanx a lot
    Keep up the good work.

    Pratik Thorat

  10. Dear sir, Exactly what I was looking for… However, it would have been really appreciated if you could have provided direct link to the calculation parameters… Some spelling mistakes also occured… Otherwise, the article is good. Regards…

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