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From zero to your first DCF valuation β the complete guide to Finmagine's 3-scenario financial modelling tool
The Financial Model is Finmagine's most powerful analytical tool. It lets you build a forward-looking 3-statement model for any NSE stock across three scenarios β Bear, Base, and Bull β and derives a DCF fair value for each. This guide takes you from opening the tool to saving your first custom valuation.
Navigate to /model/ from the nav (Analysis group) or directly from any stock page. The landing page shows a grid of all stocks with pre-generated AI assumptions β sorted by market cap, filterable by sector.
Type any company name or NSE symbol in the search bar. As you type, autocomplete suggestions appear. Click a result or press Enter to load the model. The URL updates to /model/?symbol=SYMBOL β you can bookmark or share any model link directly.
When you open a stock, the model fetches three things simultaneously from the database:
The first table you see shows 5 years of audited financial data. This is your calibration baseline β before you accept or modify any projection, you need to understand where the company has been.
| Row | What It Tells You |
|---|---|
| Revenue | Top-line growth trend β is the company growing, stagnating, or shrinking? |
| EBITDA & Margin % | Operating profitability and pricing power β watch for margin compression trends |
| PAT & Margin % | Bottom-line after interest and tax β the actual earnings delivered to shareholders |
| D&A | Non-cash charge β high D&A relative to EBITDA indicates heavy fixed-asset businesses |
| Interest | Debt-servicing cost β rising interest on flat earnings = leverage trap |
| Capex | Investment in future growth β compare to D&A; Capex > D&A means expanding asset base |
| FCF | Cash available after operations and capex β the only number that matters for DCF |
| Net Debt | Total Debt minus Cash β positive = net borrower, negative = net cash company |
The assumptions matrix is the heart of the model. It shows 7 drivers across 5 forward years, for each of the 3 scenarios. Every cell is an editable input β click any number to change it, and projections update instantly.
Volume slowdown, margin pressure, input cost headwinds. The downside case if things go wrong.
Continuation of recent trend with moderate improvement. The most likely outcome given current conditions.
Market share gains, margin expansion, new segment success. The upside case if everything goes right.
| Driver | Unit | What to Consider |
|---|---|---|
| Revenue Growth | % YoY | Industry growth rate + market share change. Bear < industry growth; Bull > industry growth. |
| EBITDA Margin | % of Revenue | Pricing power + cost structure. Anchor near historical average; adjust for competitive dynamics. |
| D&A % of Revenue | % | Generally stable unless major capex cycle changes fixed-asset base. Use 3-year avg as anchor. |
| Interest (βΉCr) | βΉ Crore | Absolute amount, not a ratio. Rises if debt is taken on for growth; falls if debt repaid. |
| Tax Rate | % of PBT | Effective rate. Companies with deferred tax assets or MAT credit may show lower effective rates. |
| Capex (βΉCr) | βΉ Crore | Absolute spend. High capex companies (manufacturers) need larger amounts; asset-light can be minimal. |
| NWC Days | Days | Net Working Capital days = (Inventory + Receivables - Payables) / Daily Revenue. Negative = float business. |
Banks and NBFCs use a simplified PAT Γ PE valuation model instead of DCF, since their cash flows are fundamentally different. The two drivers are:
Fair Value = Year 5 EPS Γ Target PE. This is simpler but requires careful judgment on the Target PE assumption.
This is the most powerful feature of the Financial Model. Instead of manually editing each assumption cell, you can get Claude or ChatGPT to research and refine all 3 scenarios for you β in a single prompt.
The AI returns a JSON object in this format:
{
"bear": { "revenue_growth":[6,5,4,4,3], "ebitda_margin":[22,21,21,20,20], ... },
"base": { "revenue_growth":[12,12,13,12,11], "ebitda_margin":[25,26,26,27,27], ... },
"bull": { "revenue_growth":[16,18,18,16,15], "ebitda_margin":[27,28,29,30,30], ... },
"wacc": 12,
"terminal_g": 5
}
You don't need to understand every field β just paste it and click Apply. The model handles the parsing.
After assumptions are set, the model automatically computes a Discounted Cash Flow valuation for each scenario.
| Input | Typical Range (India) | Guidance |
|---|---|---|
| WACC | 10β16% | Large-cap stable: ~12%. Small-cap risky: ~15%. WACC must always exceed Terminal Growth. |
| Terminal Growth | 4β7% | Use India's long-run nominal GDP growth (~6β7%) as the ceiling. Conservative: 4β5%. |
Each scenario shows a fair value card with three numbers:
Below the fair value cards is a 5Γ5 sensitivity table showing how fair value changes across Β±2% WACC and Β±2% terminal growth variations. This tells you how sensitive the valuation is to your discount rate assumptions β a critical check for capital-intensive or high-growth companies.
The Reverse DCF answers: "What revenue CAGR does the market currently price in?" If the implied revenue CAGR is higher than what's realistic for the sector, the stock is likely overvalued. If it's lower than even the bear case, the market may be mispricing the risk.
After applying your custom AI refinements, you can save your assumptions permanently using the "πΎ Save to My Valuations" button. This persists your bear/base/bull conviction to your personal account.
Once saved, visit My Valuations (appears in nav under Analysis after your first save). The page shows all your saved stocks with:
Finmagine gives you 30+ computed financial ratios, sector benchmarks, FII/DII flows, the Finmagine Score, and AI-powered analysis — all in one place.