CAGR (Compound Annual Growth Rate) is the rate at which a metric — revenue, profit, share price — would need to grow each year, compounded, to reach the ending value from the starting value over a given number of years.
CAGR = (Ending Value ÷ Starting Value)^(1 ÷ Years) − 1
Why it matters for unlisted shares
CAGR is the standard way to compare growth across companies and time periods. A company that grew revenue from ₹100 crore to ₹250 crore in 4 years has a revenue CAGR of ~26%. When evaluating an unlisted company, look at its 3–5 year revenue and EBITDA CAGR alongside the implied valuation — fast-CAGR businesses justify higher multiples, but the CAGR must be real and sustainable.
CAGR also measures your own investment return: buying at ₹100, selling at ₹250 after 4 years = ~26% CAGR.
Example: An unlisted logistics company posted a 5-year revenue CAGR of 32% against listed peers at 18% — justifying a premium multiple.