Sensitivity Analysis in Valuation: Mapping Input Variables That Most Affect Valuation Outcomes

This study investigates the sensitivity of Discounted Cash Flow (DCF) valuation outcomes to key input variables using Reliance Industries Ltd. as the reference company. The analysis is based on historical financial data, projected cash flows, and valuation assumptions structured within an Excel-based financial model. The DCF approach is used to estimate intrinsic value per share, while sensitivity analysis evaluates how variations in the Weighted Average Cost of Capital (WACC), revenue growth, EBITDA margin, terminal growth rate, capital expenditure, and working capital assumptions influence valuation outcomes. The findings reveal that WACC and terminal growth rate exert the highest impact on intrinsic value, followed by profitability drivers such as EBITDA margin and revenue growth. The study highlights the importance of sensitivity analysis in improving transparency, reliability, and decision-making in corporate valuation.