Dividend Discount Model (Gordon Growth) Calculator
What is the intrinsic fair market value per share based on sustainable perpetual dividend distributions?
Financial Inputs
Latest historical 12-month dividend distributed per equity share.
Sustainable long-term perpetual compound growth rate of dividend distributions (must be less than Ke).
Required rate of return on equity investment given asset risk profile.
Total fully diluted equity share count.
Intrinsic Value Per Share (P0)
Based on a current annual dividend of ₹15/share growing at 6% perpetually, the intrinsic Fair Market Value is ₹198.75 per share.
Total Implied Equity Valuation
19,87,50,000
Projected Next-Year Dividend (D1)
15.9
Key Financial Takeaways
- Based on a current annual dividend of ₹15/share growing at 6% perpetually, the intrinsic Fair Market Value is ₹198.75 per share.
- Total enterprise intrinsic equity value sizes to ₹19,87,50,000.
- Total expected investor return (14%) breaks down into a 8% cash dividend yield and 6% perpetual capital appreciation growth.
Frequently Asked Questions
When is the Dividend Discount Model (DDM) most appropriate?
DDM is ideal for mature, profitable enterprises with consistent dividend track records and transparent payout ratios (such as established manufacturing units, utilities, or financial institutions). It is unsuitable for early-stage or fast-growing companies that reinvest all earnings back into working capital.
What happens if dividend growth rate (g) exceeds the cost of equity (Ke)?
Mathematically, if g ≥ Ke, the formula produces a negative denominator or infinite value. In real markets, a company cannot grow its dividends faster than the overall required rate of return in perpetuity.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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