Glossarytaught in M3.04
Mid-year convention
Also called mid-year discounting.
Discounting each year's cash flow as though it arrived in the middle of the year rather than at the end, which is closer to how a business actually collects money.
₹325 crore discounted at 11.5% for half a year is worth ₹308 crore, against ₹291 crore under end-year discounting.
Mid-year discounting raises a valuation by roughly half a year's discount rate, or about 5% at typical rates. That's not a rounding difference. Be inconsistent about it between two companies and they'll look different when they aren't.
Apply it or don't, and note which.