Revenue Multiple
Values the business as a multiple of annual revenue, using the multiple range that comparable Indian companies in the sector actually trade or transact at.
How it works
- 1
Take trailing annual revenue as the base.
- 2
Select the sector's revenue multiple band. For Indian mid-market deals this is roughly 0.6×–1.5× for manufacturing, 1×–2.5× for consumer brands, and 3×–8× for SaaS.
- 3
Move within the band based on growth rate, gross margin and revenue quality (recurring vs one-off).
- 4
Multiply revenue by the selected multiple to get enterprise value.
Sample: a Bengaluru B2B SaaS company
| Annual recurring revenue | ₹12,00,00,000 |
| YoY growth | 45% |
| Gross margin | 78% |
| Sector multiple band | 3.0× – 8.0× (SaaS) |
| Step | Formula | Result |
|---|---|---|
| Start at the sector midpoint | Band midpoint of 3.0× – 8.0× | 5.5× |
| Adjust for 45% growth | 5.5× + 0.8× growth premium | 6.3× |
| Adjust for 78% gross margin | 6.3× + 0.2× margin premium | 6.5× |
| Apply to revenue | 12,00,00,000 × 6.5 | ₹78,00,00,000 |
The same ₹12 crore of revenue in a low-growth services business at 0.8× would be worth ₹9,60,00,000. The multiple, not the revenue, is doing the work — which is why the band and the justification matter more than the arithmetic.
- High-growth businesses that are deliberately unprofitable while they scale.
- Recurring-revenue models where revenue quality is high and churn is low.
- Quick sanity checks and benchmarking against recent sector transactions.
- Ignores profitability completely — two companies with identical revenue and wildly different margins get the same value.
- Low-margin trading or distribution businesses, where revenue is a poor proxy for economic value.
- Sectors with thin comparable-transaction data, where the band itself is guesswork.
Valuenomic runs this method alongside five others and weights the results.