Part 4: Arriving at BPCL’s Intrinsic Value

A step-by-step DCF valuation combining cash flows, capital costs, and terminal growth outlook

What This Section Covers:

In Part 4, we tie together the revenue, margin, reinvestment, and cost of capital assumptions from previous sections to compute BPCL’s intrinsic value per share using the Discounted Cash Flow (DCF) method. Specifically, we:

• Project Free Cash Flows to the Firm (FCFF) over a 10-year period based on operating and capex forecasts.

• Discount cash flows using BPCL’s WACC, incorporating India-specific equity and debt costs.

• Estimate terminal value using perpetual growth model

• Adjust for net debt and cash to arrive at BPCL’s equity value and per-share intrinsic valuation.

The goal is to provide a comprehensive, data-driven view of what BPCL is worth today based on its expected future cash flows and strategic capital deployment.

Base-Case DCF Value

Bringing together the above pieces, I forecast BPCL’s unlevered free cash flows for 10 years (FY2025–34) and discount them at ~12.3% WACC. I then add the value of cash/investments and subtract debt to get equity value.