Comprehensive 2026 overview of valuation types in India: asset, income, market and stage-specific methods, plus statutory frameworks and right-fit selection.
Valuation in 2026 is no longer one conversation — it is several, each driven by purpose. The same business can be worth different numbers under tax law, under accounting standards, under FEMA, in a strategic acquisition, or in a public-market reference. Knowing which type of valuation applies, when, and by whom is critical for any Indian founder, CFO, or board.
Asset-Based Valuation
Asset-based methods value the company at the sum of its assets less liabilities. The Net Asset Value (NAV) method uses book values, suitable for asset-heavy or distressed businesses. The Replacement Cost method estimates the cost of recreating the asset base. The Liquidation Value method assumes a forced sale. None of these capture growth potential — useful as a floor, not a target.
Income-Based Valuation
Income approaches value the business based on its expected future cash flows. The Discounted Cash Flow (DCF) method projects free cash flow over a forecast horizon, discounts at the weighted average cost of capital, and adds a terminal value. Capitalisation of Earnings is a simpler variant for stable businesses. Income methods dominate growth-stage and profitable-stage valuations.
Market-Based Valuation
Market methods value the business by reference to peers. Comparable Company Analysis uses listed peer multiples (EV/Revenue, EV/EBITDA, P/E). Comparable Transaction Analysis uses recent M&A transaction multiples. These methods anchor valuation in observable market reality — and are especially powerful when peers and transactions are recent and well-matched.
Stage-Specific Frameworks
- Berkus Method — qualitative pre-revenue valuation across five risk factors
- Scorecard Method — comparative peer benchmarking for seed-stage startups
- Venture Capital Method — back-solving from expected exit value and target return
- Risk Factor Summation — peer median adjusted for 12 risk factors
- First Chicago Method — weighted average of optimistic, base, and pessimistic scenarios
Statutory and Regulatory Valuations
Indian regulators prescribe specific methodologies. Rule 11UA under the Income Tax Act applies to unquoted share issuances. The Companies Act prescribes valuer requirements under Section 247. FEMA rules govern cross-border share pricing. SEBI prescribes valuation for delisting, buybacks, and takeover code triggers. Ind AS 113 governs fair-value measurement for accounting. Each statutory valuation must be performed by the prescribed class of valuer.
Choosing the Right Type
The right type depends on purpose. A fundraise uses market and income approaches together. An ESOP exercise price uses Rule 11UA. A scheme of arrangement uses Section 247 valuer methodology. A buyback uses the prescribed SEBI framework. A purchase price allocation uses Ind AS 113. Misapplying a method — using a strategic-acquisition multiple for a tax filing, for instance — creates real regulatory and tax risk.
Conclusion
Understanding the types of valuation is foundational for any Indian business in 2026. Use asset-based methods as floors, income-based methods for forward-looking value, market-based methods for peer-anchored credibility, and statutory frameworks where the law prescribes them. The right type for the right purpose, performed by the right valuer, defends the number in every room it lands in.
