Key Takeaway
The Dividend Discount Model (DDM) values a stock as the present value of all future dividends. For stable dividend-paying companies, the Gordon Growth Model simplifies this to: Value = D1 / (r - g).
Dividend Discount Model (DDM)
Estimate intrinsic stock value using the Gordon Growth Model.
Intrinsic Value per Share
₹262.50
Next Year Expected Dividend (D1)
₹10.50
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Frequently Asked Questions
What is the Dividend Discount Model (DDM)?
DDM is a quantitative valuation method that estimates the intrinsic value of a company based on the theory that its stock is worth the sum of all its future dividend payments, discounted to their present value.
What are the limitations of the DDM?
The model is useless for companies that do not pay dividends (like most growth tech stocks) and makes rigid assumptions about constant dividend growth rates.
What is the Gordon Growth Model?
The Gordon Growth Model is the most common variation of the DDM, which assumes that dividends will grow at a constant rate infinitely.
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