Intrinsic Value is the true or fundamental value of an asset, based on its underlying financial performance, future cash flows, and growth potential—independent of its current market price.
Intrinsic Value helps investors determine whether an asset (like a stock) is undervalued or overvalued. It is calculated using financial models such as Discounted Cash Flow (DCF), which estimate the present value of future earnings.
This concept is widely used in value investing, popularized by Warren Buffett.
👉 If Market Price < Intrinsic Value → Undervalued
👉 If Market Price > Intrinsic Value → Overvalued
"If a stock’s intrinsic value is ₹500 but it trades at ₹400, it may be considered undervalued."