📉 DCF & Reverse DCF Calculator

DCF & Reverse DCF Calculator

Estimate a PSX stock's intrinsic value from a free cash flow forecast (Forward DCF), or start from its current market price and solve backward for the growth rate the market is already assuming (Reverse DCF). See the full DCF vs Reverse DCF guide for the formulas and worked examples behind this calculator.

Quick answer: a company with Rs 500m free cash flow growing 15% for 5 years, 5% terminal growth, and an 18% discount rate is worth roughly Rs 53 per share on 100m shares. If that same stock trades at Rs 80, the market is pricing in about 11.1% perpetual growth — enter your own numbers below.

Calculator Mode

Current Free Cash Flow (Rs m)

Rs 10mRs 20,000m

FCF Growth Rate (Stage 1)

0%40%

Explicit Forecast Period

1 yr15 yrs

Terminal Growth Rate

0%10%

Discount Rate (WACC)

5%30%

Net Cash / (Net Debt) (Rs m)

−Rs 5,000mRs 10,000m

Shares Outstanding (m)

1m2,000m

Current Market Price (Rs, optional)

Rs 0 (skip)Rs 1,000

Intrinsic Value / Share

—

Intrinsic Value / Share

—

Enterprise Value

—

Upside vs Market Price

—

Present Value by Year

Discounted free cash flow, plus terminal value

Value Composition

Value Bridge

Year-by-Year DCF Table

Year	FCF (Rs m)	Discount Factor	PV (Rs m)

How to Use Both Together

Run Reverse DCF first. Enter the current market price, free cash flow per share, and discount rate — this takes seconds and tells you whether the market is pricing in modest, optimistic, or implausible growth.
Judge the implied growth against the benchmarks shown: a conservative baseline, Pakistan's nominal GDP growth, and KSE-100 long-run growth.
Build a Forward DCF only if the implied growth looks defensible — enter FCF, growth rate, forecast years, terminal growth, discount rate, net cash, and shares outstanding for an explicit intrinsic value per share.
Sensitivity-test the discount rate. Re-run at ±2–3 percentage points. If the fair value swings from cheap to expensive, treat the output as a range, not a target price.

Frequently Asked Questions

What is DCF (Discounted Cash Flow)?

DCF estimates what a company is worth today by forecasting its future free cash flows and discounting each year back to present value using a discount rate (WACC) that reflects risk and the time value of money. Add up the discounted explicit-period cash flows plus a terminal value, divide by shares outstanding, and you get an intrinsic value per share.

What is Reverse DCF?

Reverse DCF flips the calculation around. Instead of forecasting growth to estimate a fair price, it starts from the stock's current market price and free cash flow per share, then solves backward for the perpetual growth rate the market must already be assuming to justify that price.

What discount rate (WACC) should I use for Pakistani stocks?

Pakistani DCF discount rates typically run 15-20%+, well above the 8-10% common in US valuations, because the risk-free rate is anchored to the SBP policy rate, which has ranged from roughly 7% to 22% over the past decade. Start with the current T-bill/PIB yield plus an equity risk premium, and re-check whenever SBP moves the policy rate.

Why does Reverse DCF show a different growth rate than my Forward DCF assumption?

That gap is the point. Forward DCF uses your own growth forecast to estimate fair value; Reverse DCF uses today's market price to back out what growth the market is already pricing in. If the two disagree, either the market disagrees with your forecast, or your forecast needs revisiting — the disagreement itself is the useful signal.

Why is Terminal Value usually more than half of a DCF valuation?

Terminal Value represents every year of cash flow beyond the explicit forecast period, to infinity, while the explicit period only covers a handful of years. Because a company keeps generating cash long after the forecast ends, terminal value commonly makes up 55-65% of total DCF value — which is also why the terminal growth rate and discount rate assumptions matter so much.