What intrinsic value means
Intrinsic value is an estimate produced by a valuation model. It is not an observable fact, a guaranteed market price or a recommendation. Different assumptions can produce very different estimates.
Discounted cash flow
A discounted cash flow model expresses assumed future cash flows in present-value terms. For a hypothetical payment of ₹110 in one year and a 10% discount rate, present value is ₹100: 110 ÷ 1.10. This example concerns an invented cash flow, not a listed company or a stock target.
A full model must distinguish enterprise cash flow from equity cash flow, account for financing and share count, and explain terminal-value assumptions. Small changes in growth or the discount rate can have a large effect.
Dividend models and accounting multiples
Dividend models depend on assumed distributions. P/E compares share price with earnings per share; P/B compares price with accounting book value. Neither ratio alone establishes that a security is cheap, expensive or appropriate for an investor.
Limits of a model
Forecast errors, negative cash flows, cyclicality, dilution and inconsistent accounting bases can make an estimate unreliable. Historical growth cannot simply be assumed to continue. This guide does not estimate the value of any named security. Getaka’s company valuation calculator and stock targets have been withdrawn.