Thanks Mudit, @Mudit.Kushalvardhan.
I have not used reverse DCF yet. If I feel lazy about something then I might use it someday. However, I make my own basic model based on management guidance and my own extraplotions.
My valuation is based on PEG ratio, based on my three to five years growth expectations, I am fine to give 2PEG for investment and breach of 3PEG makes me dizzy 
.
Below is an example of PB Fintech, based on management guidance and my own extrapolation of 30% revenue growth and 30% incremental revenue going to EBITDA/Profit. I dont give value to FY2030 but just extrapolated. I keep updating this as and when market cap changes or new information becomes available. The biggest risk of doing this is might be we remain in our own world, we always need to test it. For example: take rate assumed here is at similar levels (~13%) through the years so that might be at risk.
| FY23 | FY24 | FY25 | FY26 | FY27 | FY28 | FY29 | FY30 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 2,558 | 3,600 | 4,680 | 6,084 | 7,909 | 10,282 | 13,367 | 17,377 |
| ESOP cost | 543 | 350 | 280 | 224 | 179 | 143 | 125 | 125 |
| EBITDA excluding esop cost | -119 | 194 | 518 | 939 | 1,486 | 2,198 | 3,124 | 4,327 |
| Other income | 174 | 350 | 385 | 424 | 466 | 512 | 564 | 620 |
| Depreciation | 65 | 108 | 140 | 183 | 237 | 308 | 401 | 521 |
| PAT | -488 | 86 | 482 | 956 | 1,536 | 2,259 | 3,161 | 4,300 |
| PAT CAGR | 463% | 234% | 106% | 92% | 82% | 75% | ||
| Mcap at 50PE | 4280 | 24110 | 47789 | 76,787 | 1,12,940 | 1,58,062 | 2,15,015 | |
| Mcap at 80PE | 6848 | 38576 | 76462.4 | 1,22,859 | 1,80,704 | 2,52,900 | 3,44,024 | |
| EBITDA Margin | -5% | 5% | 11% | 15% | 19% | 21% | 23% | 25% |
| Return expectations at 50PE from FY27 | -2% | 15% | 23% | 26% | 28% | |||
| Return expectations at 60PE from FY27 | -3% | 18% | 27% | 31% | 33% | |||
| Return expectations at 80PE FY27 | 24% | 35% | 38% | 38% | 38% |
Professor Damodaran says, even if models/forecasts are not correct we should still do it. It gives us more insights to us and a range of valuations.
I have such basic models for all my larget bets. I have earlier shared Ami Organics in the thread which is appreciated by @Worldlywiseinvestors ,I mention this as I am his big follower and was delighted to see his like.
Disclosure: Invested in PB Fintech and trasacted in last 30 days.
Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example purpose. I may buy more, exit or partly sell the stock/bonds without any prior intimation
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