Free cash flow yield

Free cash flow divided by market capitalisation, expressed as a percentage. What the shares would yield if every rupee of free cash were paid out.

A company generating ₹325 crore against a ₹12,000 crore market value yields 2.71%.

The measure is harder to manipulate than an earnings multiple, because cash flow after capital spending is difficult to dress up for long. It is also lumpy, since a single year's capital expenditure can swing it, so it should be averaged across a cycle.

Compare it with the ten-year government bond yield. That comparison is the cleanest statement of what equity risk is being paid for.