Free cash flow to equity

What is left for shareholders after every operating cost, capital spending, interest, and movement in borrowings. It is discounted at the cost of equity and gives an equity value directly, with no enterprise-value bridge to build.

Start from operating cash flow, subtract capital expenditure, add new borrowing and subtract repayments. A company with ₹785 crore of operating cash flow, ₹460 crore of capital spending, ₹150 crore of fresh debt drawn and ₹90 crore repaid leaves ₹385 crore for equity.

The measure is honest about something the enterprise route hides. A company that funds its growth with new debt is showing shareholders more cash today and more risk tomorrow, and this line shows both moves.

It is also volatile, because debt is drawn in lumps. Average it over a cycle before valuing anything.

Shareholders last, as always.