Nifty 50 Discounted Cash Flow Valuation

This report presents a discounted cash flow (DCF) valuation of all current Nifty 50 constituents. The purpose is relative-value screening: identifying which large-cap Indian equities appear inexpensive or expensive versus a single, consistent set of macro and growth assumptions.

For each company we estimate free cash flow to the firm (FCFF), project cash flows over a five-year horizon, capitalize a terminal value, and discount at the weighted average cost of capital (WACC). The output is an intrinsic value per share, compared with the prevailing market price.

Classification bands are defined from model upside:

$$\text{Model upside}=\frac{V_{\text{intrinsic}}}{P_{\text{market}}}-1$$

Undervalued if upside exceeds +20%; overvalued if below −20%; otherwise fair.

The following macro inputs are held constant across the universe (scenario controls in the results section allow sensitivity analysis):

Risk-free rate $r_f$ = 7.0% — proxy for the India 10-year government bond yield.

Equity risk premium $ERP$ = 6.0% — expected excess return of equities over the risk-free rate.

Terminal growth $g$ = 4.0%, subject to $g<WACC$.

Near-term FCFF growth = 8.0% per year for five explicit forecast years.

Effective tax rate and cost of debt are company-specific where reported; otherwise standard fallbacks (25% tax, 8.5% pretax cost of debt, beta = 1.0).

1. Free cash flow to the firm (base year)

$$FCF{F}_0=EBIT\cdot (1-t)+Dep-CapEx$$

2. Cost of equity (CAPM)

$$r_e=r_f+\beta \cdot ERP$$

3. Weighted average cost of capital

$$WACC=w_e{r}_e+w_d{r}_d(1-t)$$

4. Explicit forecast and terminal value

$$FCF{F}_t=FCF{F}_0\cdot (1+g_{FCFF}{)}^t,PV(FCF{F}_t)=\frac{FCF{F}_t}{(1+WACC{)}^t}$$

$$TV=\frac{FCF{F}_n\cdot (1+g)}{WACC-g},PV(TV)=\frac{TV}{(1+WACC{)}^n}$$

5. Enterprise and equity value

$$EV=\sum _{t=1}^{n}PV(FCF{F}_t)+PV(TV),V_{\text{equity}}=EV-D+Cash$$

$$V_{\text{intrinsic per share}}=\frac{V_{\text{equity}}}{Shares}$$

DCF valuations are highly sensitive to $g$ and $WACC$; small changes in assumptions can materially alter intrinsic value. This study applies one central scenario rather than a full distribution per issuer.

Financial institutions are approximated where standard operating-profit lines are unavailable; FCFF-based DCF is not the primary framework for banks and insurers — those rows should be read as illustrative only.

Reported fundamentals may be revised; negative or unstable cash-flow bases can produce extreme or negative implied values.

This analysis is research output for discussion purposes and is not investment advice. Transaction costs, taxes, and market microstructure are not modelled.

The exhibits in this section contain the full cross-section of valuations, summary statistics, and interactive scenario controls.

Scenario sliders adjust $r_f$, $ERP$, $g$, and near-term FCFF growth; all valuations update accordingly.

Exhibits include the distribution of model upside, WACC versus upside, equity-risk-premium sensitivity, and issuer-level detail on selection.

DCF valuations are highly sensitive to growth and discount-rate assumptions; the cross-section is best read as a relative ranking exercise rather than point forecasts of fair value.

Financial institutions and negative-cash-flow issuers require caution when interpreting FCFF-based outputs. This analysis is research output for discussion purposes — not investment advice.