Intrinsic Value refers to the true or fundamental worth of an asset, stock, or company based on its underlying financial performance, rather than its current market price. It represents what an investor believes a company is actually worth, determined through detailed analysis of cash flows, earnings, dividends, and growth prospects. The concept is central to fundamental analysis and value investing, helping investors identify undervalued or overvalued securities.

For example, if a companyís share is trading at ?800 in the market but its calculated intrinsic value is ?1,000, it is considered undervalued, suggesting a potential buying opportunity. Conversely, if the market price exceeds intrinsic value, the stock may be overvalued, indicating possible caution or a selling opportunity.

There are various methods to estimate intrinsic value, such as the Discounted Cash Flow (DCF) model, which calculates the present value of expected future cash flows, or the Dividend Discount Model (DDM), which values a company based on its future dividend payments. Analysts may also consider factors like the companyís assets, liabilities, profitability, and risk profile to arrive at a realistic estimate.

Itís important to note that intrinsic value is not an exact figureóit is an estimate based on assumptions and forecasts that can vary among analysts. Market prices often deviate from intrinsic values due to investor sentiment, speculation, or short-term market trends. Over time, however, prices tend to align with intrinsic values as fundamentals play out. Understanding intrinsic value helps investors make rational, informed, and long-term investment decisions rather than reacting to market volatility or hype.