Sectors and cohorts

A single DCF template applied across all industries is the most common failure mode in retail valuation tools. YieldIQ uses sector-aware inputs and a cohort router so that a bank, a REIT, an IT services company, and a regulated utility each get a model that fits their economics.

Sector-specific WACC

The discount rate in the DCF is a weighted average cost of capital that varies by sector. The risk-free leg is the Indian 10-year G-Sec; the equity-risk premium and beta come from sector tables in models/industry_wacc.py; the cost of debt reflects the company’s own interest burden where reliable. A utility with stable cash flows carries a lower WACC than a cyclical commodity producer, which is what the published numbers reflect.

Cohort routing

Cohort routing decides which valuation engine runs for a given ticker. The router inspects the company’s primary business, regulatory status, and balance-sheet shape before selecting an engine. The major cohorts are:

• Banks and NBFCs — residual-income / dividend-discount with capital-adequacy and credit-cost inputs rather than free-cash-flow DCF.
• REITs and InvITs — distributable cash flow with explicit treatment of asset maturity and the regulated payout floor.
• Regulated utilities — allowed-RoE-driven cash flow with regulatory true-up assumptions and tariff-period sensitivities.
• Cyclicals — normalised earnings averaged across a sector-specific cycle length (steel and cement, for example, are normalised over longer windows than auto-ancillaries).
• Generic — standard free cash flow to firm with sector-aware terminal growth, used for IT services, consumer, pharma, and industrials.

Sector-specific terminal growth

Terminal growth is set per sector rather than as a single blanket figure. Mature FMCG and utilities are modelled at low single digits; IT services and select consumer names sit higher; cyclicals are pinned close to long-run nominal GDP. The intent is to avoid the single largest source of DCF error in retail tools — one terminal assumption pasted across every industry.

Peer cohorts on /compare

On the comparison surface the peer cohort is the set of tickers that share the same sector and market-cap bucket. The Day-80 transparency captions display the cohort definition so the reader can see exactly which peer set the comparison is drawn from. A ticker right at the edge of a cap bucket may sit alongside a different peer set after a large move.

Example

A private-sector bank is routed through the bank engine, which means capital adequacy and credit-cost trajectory replace free-cash-flow as the primary inputs. The Prism Safety pillar substitutes leverage and interest-coverage with capital-adequacy and NPA ratios. The verdict pill and FV are still rendered in the same place on the page, but the underlying computation is materially different from what a generic DCF would produce.