Value an EV charging network that loses money until year four. In one scenario it scales to Rs 600 crore of free cash flow; otherwise it is sold cheaply. How do you build one value?

About Rs 1,472 crore of equity. In the scale case the network is worth Rs 3,300 crore including its cash; in the fail case, three years of burn and a Rs 200 crore sale leave Rs 254 crore. Weighting 40% and 60% gives Rs 1,472 crore. One forecast would force a choice between a value that is too high most of the time and one that is too low when the business works.

Because for a young business the outcomes are not spread around a middle; they split. A student deciding whether to join a start-up does not imagine a medium outcome; they picture it working and it folding, and weigh the two. For early companies, weight the scenarios rather than force one forecast, because no single path is the likely one. Zephyrine either reaches the utilisation that makes chargers profitable or it does not. A middle path, half the scale cash flows, describes a company that almost never exists.

Value each path on its own, at the same 14% rate. In the scale branch, the eight years of cash flow are worth Rs 396 crore today and the terminal valueThe value at the end of the forecast of all cash flows after it, here year 9 onward growing 5% a year, worth 600 x 1.05 / (0.14 - 0.05) at year 8. adds Rs 2,454 crore, so with Rs 450 crore of cash the equity is Rs 3,300 crore. In the fail branch the same burn plus a Rs 200 crore sale in year three is worth minus Rs 196 crore, so the cash leaves Rs 254 crore. Almost the whole scale value sits in the terminal value, which is typical of a business still losing money.

That is the common shortcut. Here it gives about Rs 1,092 crore, below the weighted Rs 1,472 crore, and nothing in the method tells you which of the two is right. A higher rate hides the failure probability inside a number nobody can check, and it punishes the far years most, which is where a scale business earns everything. If you believed the scale odds were 60% instead of 40%, the tree tells you the value moves to Rs 2,082 crore; a 25% rate gives you no way to say which belief it contains. Keep the risk in the probabilities and the time value in the rate.

Close with what would move the weights. Utilisation per charger, the share of chargers above breakeven, and the price per unit of power against the grid tariff are the three numbers to watch. A quarter of rising utilisation on the older sites is evidence for the scale branch; stalling utilisation while new sites open is evidence for the other.