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Is dcf valuation any useful?

I tried dcf valuation on multiple stocks... all of them seems to be overpriced. is it any use to find the true value of stocks?



  • First of all, no valuation method is perfect as predicting futures of a company is no easy task. Nevertheless, they can give you a rough estimate. As Warren Buffett used to say: "It is better to be approximately right, than precisely wrong"

    DCF Valuation method is only as good as the inputs. If you are providing reasonable inputs, the output will be approximately correct. On the other hand, if the inputs are non-realistic (like unreasonable growth rate etc), then the output will also be incorrect. 'Garbage in, Garbage out'.

    Now, back to your question. Yes, most of the companies are currently trading at a premium according to dcf valuation. But the point is that you do not need to buy any stock right now. You can keep those stocks in your watchlist and whenever the price comes below the intrinsic value in future, you can purchase that stock.

    Lastly, there are thousands of stocks listed in the Indian stock market. And all you need is five-six good stocks. Keep researching and eventually, you will find a few good ones. Cheers!!

  • Still you are holding Apollo tyres shares sir?
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