FEDERALBNK.NS
FEDERAL BANK LTDClosedFEDERALBNK.NS discounted cash flow valuation
FEDERAL BANK LTD is a banks - regional company. Its cash flows include lending and deposits, so free cash flow isn't owner earnings and this model can mislead. Compare it with peers on book value and earnings instead.
FEDERALBNK.NS Fair Value
Reverse DCF: today's price implies 5.6% a year of FCF growth for years 1–5, against 20.8% in this model.
Model: 20.8% from analyst next-year EPS & revenue growth. Fades linearly to terminal growth by year 10.
Model: 8.14% (CAPM, see the build-up).
Long-run growth after year 10; keep it at or below nominal GDP.
Value Bridge
| PV of free cash flow, years 1–10 | INR 677.43B |
|---|---|
| PV of terminal value (67% of EV) | INR 1.37T |
| Enterprise value | INR 2.05T |
| + Cash & investments | INR 268.97B |
| − Total debt | −INR 331.93B |
| Equity value | INR 1.99T |
| ÷ Shares outstanding | 2.47B |
| Value per share | INR 804.15 |
| Market cap | INR 815.23B |
Discount Rate Build-up
| Risk-free rate (10-yr Treasury) | 5.22% |
|---|---|
| Beta (clamped 0.5–2.5) | 0.50 |
| Equity risk premium | 5.00% |
| Cost of equity (CAPM) | 7.72% |
| Pre-tax cost of debt | 12.00% |
| Tax rate | 23.5% |
| Debt / (equity + debt) | 28.9% |
| WACC | 8.14% |
Cost of debt is interest expense ÷ total debt, held between the risk-free rate and 12%.
Free Cash Flow: History and Projection
Sensitivity: Value per Share
| WACC ↓ / g → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 6.14% | 1,062.61 | 1,175.23 | 1,318.77 | 1,507.99 | 1,768.85 |
| 7.14% | 849.16 | 919.67 | 1,005.35 | 1,111.71 | 1,247.27 |
| 8.14% | 700.96 | 748.36 | 804.15 | 870.78 | 951.75 |
| 9.14% | 592.33 | 625.84 | 664.40 | 709.21 | 761.96 |
| 10.14% | 509.48 | 534.09 | 561.92 | 593.62 | 630.10 |
Green is above today's price, red below (full colour at ±30%). The outlined centre cell is the current inputs.
Projected Cash Flows
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Base (FY2026) | — | INR 40.41B | — | — |
| Year 1 | 20.8% | INR 48.81B | 0.925 | INR 45.14B |
| Year 2 | 20.8% | INR 58.97B | 0.855 | INR 50.42B |
| Year 3 | 20.8% | INR 71.23B | 0.791 | INR 56.33B |
| Year 4 | 20.8% | INR 86.05B | 0.731 | INR 62.92B |
| Year 5 | 20.8% | INR 103.95B | 0.676 | INR 70.29B |
| Year 6 | 17.1% | INR 121.76B | 0.625 | INR 76.14B |
| Year 7 | 13.5% | INR 138.18B | 0.578 | INR 79.90B |
| Year 8 | 9.8% | INR 151.75B | 0.535 | INR 81.14B |
| Year 9 | 6.2% | INR 161.09B | 0.494 | INR 79.65B |
| Year 10 | 2.5% | INR 165.12B | 0.457 | INR 75.50B |
Method
Two-stage free-cash-flow model, the same as the bot's lgf dcf: five years at the chosen growth rate, a straight-line fade to terminal growth by year ten, then a Gordon-growth terminal value. Everything is discounted at WACC.
Base cash flow is the trailing four quarters of operating cash flow minus capital expenditure (the latest fiscal year when quarters are missing). Default growth uses analyst long-term growth when Yahoo publishes it, else the average of next year's EPS and revenue growth, else revenue CAGR, held between −5% and 25%.
A DCF is only as good as its inputs. The terminal value is usually most of the answer, so read the sensitivity grid before the headline number. This is a model, not investment advice.