Fair Value / Intrinsic Value Calculator

Intrinsic value is the estimated true worth of a business and its shares, derived from fundamentals such as earnings, cash flow, assets, debt and growth potential. It is sometimes called the real value or fundamental value of a stock, because it is built from the company’s characteristics rather than from sentiment.

The idea traces back to Benjamin Graham, the teacher of Warren Buffett, who argued that the market behaves like a voting machine in the short run and a weighing machine in the long run. Prices can swing on excitement or panic, but over time they tend to drift back toward the weight of the underlying business. Intrinsic value is an attempt to estimate that weight in advance.

An important caveat: intrinsic value is an estimate, not a fact. It depends on the assumptions you feed in — growth rate, discount rate, time horizon. Two careful analysts looking at the same company can arrive at different figures. That is normal, and it is why disciplined investors treat any single number as a range, not a precise verdict.

These two terms are used interchangeably so often that the distinction gets lost. They are closely related, but they are not identical, and understanding the difference sharpens how you read any calculator’s output.

Intrinsic Value

Intrinsic value focuses inward on the company. It answers: based purely on this business’s fundamentals — its cash generation, earnings, assets and growth — what should one share be worth? It is largely independent of the market and is the product of a valuation model plus your assumptions.

Fair Value

Fair value is broader. It is an estimate of the price at which a share would reasonably change hands between a willing, informed buyer and seller, and it can blend fundamentals with market-based inputs such as comparable companies, sector multiples and prevailing conditions. In accounting and many tools, fair value is essentially an estimate of intrinsic value — a practical, market-aware version of the same idea.

For everyday analysis, you can treat them as two views of the same target. A well-built calculator often reports a consensus or blended figure, which is closer to the practical fair-value idea, while still showing the individual intrinsic-value models underneath.

Knowing a company’s estimated intrinsic value changes how you look at a falling or rising price. Instead of reacting to the move, you have a reference point to interpret it against. Here is why that reference point is so useful:

• It separates price from worth. A stock dropping 10% on a bad-news day has not necessarily lost 10% of its business value. Intrinsic value helps you tell the difference between a genuine deterioration and a temporary mood swing.
• It anchors decisions in fundamentals. When you study a company’s cash flows and earnings, you are forced to understand why it might be worth a certain amount — which is far more durable than acting on a tip or a chart pattern.
• It introduces the margin of safety. Because the estimate can be wrong, value investors study stocks trading at a meaningful discount to their estimated worth. That gap is a cushion against errors in your own assumptions — a concept Graham and Buffett placed at the centre of their approach.
• It works across market cycles. Short-term prices can be noisy in both directions. A fundamentals-based estimate gives a steadier, long-term lens, which is especially helpful during volatile periods.

No single formula captures every type of company. A bank, a software firm, a dividend-paying utility and an asset-heavy manufacturer each suit different methods. That is why the Equity Timer calculator runs ten valuation models and blends the sensible ones into a single estimate. Below is each model, its formula, and a plain-English note on what it does.

1. Discounted Cash Flow (DCF)

Notes: CF = current cash flow or earnings; g = expected growth rate; r = the discount rate (your required return, reflecting risk); n = the year number. Terminal value captures the cash beyond the forecast window. The model projects a company’s future cash over roughly ten years and pulls it back to today’s money, because money earned years from now is worth less than money in hand today.

2. Graham Number

Notes: EPS = earnings per share; BVPS = book value per share. The 22.5 comes from Benjamin Graham’s rule of thumb that a defensive stock should trade at no more than 15× earnings and 1.5× book value (15 × 1.5 = 22.5). It is a quick, conservative gauge of value for stable, profitable companies.

3. Graham Formula (India-Adjusted)

Notes: EPS = earnings per share; 8.5 = base P/E for a no-growth company; g = expected annual earnings growth (in %). The original formula was built for US conditions, so this version multiplies by 6.5 (a reference yield) divided by the prevailing fixed-deposit rate — adjusting the estimate for India’s higher interest-rate environment.

4. P/E Fair Value

Notes: Multiplies earnings per share by a price-to-earnings multiple appropriate to the company’s sector. Quick and intuitive, but only as reliable as the chosen multiple — a defensive sector and a high-growth sector justify very different P/E levels, so the calculator applies a sector-aware figure rather than one fixed number.

5. Peter Lynch (PEG)

Notes: Named after fund manager Peter Lynch, this approach links a fair P/E directly to the growth rate — the idea being that a company growing earnings at, say, 15% a year can reasonably carry a P/E around 15. It puts price in the context of growth and helps avoid judging fast-growing firms by their P/E alone.

6. EV/EBITDA

Notes: EBITDA = earnings before interest, tax, depreciation and amortisation; Net Debt = total debt minus cash; Multiple = a sector-appropriate EV/EBITDA figure. Because it values the whole business including its debt, this method is useful for comparing companies that carry very different debt loads.

7. Dividend Discount Model (DDM / Gordon Growth)

Notes: D₀ = the most recent dividend; D₁ = next year’s expected dividend; r = required rate of return; g = the steady annual growth rate of dividends. Best suited to mature companies that pay consistent, growing dividends. If a company pays no dividend, this model is skipped.

8. Book Value (Justified P/B)

Notes: BVPS = book value per share; ROE = return on equity; r = required return; g = growth rate. Rather than using a fixed price-to-book multiple, this derives the multiple a company deserves from how profitably it uses shareholder equity. Especially relevant for banks, financials and asset-heavy businesses where the balance sheet drives value.

9. Reverse DCF

Notes: This flips the DCF around. Instead of estimating value from an assumed growth rate, it starts from the current market price and works out the growth rate the market is implicitly expecting. Comparing that implied growth to the company’s actual historical growth shows whether the market’s expectations look modest or demanding.

10. Margin of Safety

Notes: Because every estimate can be wrong, this takes the average of the core fundamental models and applies a 25% discount as a cushion against errors in the assumptions. The margin-of-safety idea — central to Graham and Buffett — is about leaving room to be mistaken and still be on reasonable ground.

The calculator is free, needs no sign-up, and covers more than 2,900 NSE/BSE stocks and over 1,500 US stocks. Here is the workflow:

1. Enter a ticker or company name. Type a symbol such as a large-cap NSE stock or a US name into the search box. The dropdown suggests matching companies as you type.
2. Click Calculate. The tool pulls the latest available fundamentals and the live price, then runs the valuation models in the background.
3. Read the headline estimate. A blended consensus value appears near the top, shown alongside the current price so you can see at a glance whether the stock is trading below or above the fundamentals-based estimate.
4. Open the model breakdown. Expand the section that lists each of the ten models and the value each one produced. Seeing the spread — not just the average — tells you how much the models agree.
5. Study the deeper sections. Explore the Financial DNA Score (a quality grade across five dimensions), ten-year margins and returns, peer comparison, balance-sheet checks and dividend history to understand why the numbers look the way they do.
6. Treat it as a starting point. Use the output to frame your own research and reading of the company’s reports — not as a final word.

A quick tip on reading the spread

If the ten models cluster tightly, the estimate is relatively robust. If they are scattered — common for high-growth, loss-making or unusually structured companies — treat the figure with more caution and lean on the qualitative sections. Wide disagreement between models is itself useful information.