CAGR
Calculator

What is CAGR?

Compound Annual Growth Rate (CAGR) expresses the year-on-year growth of an investment over a given period, assuming the returns compound uniformly every year. Unlike a simple percentage gain, CAGR factors in how long the money was at work. It is the most widely used metric for comparing performance across different assets, mutual funds, or time periods because it delivers a single, standardised annual rate regardless of when you invested or for how long.

CAGR does not tell you what happened each year — it tells you the constant rate that would have taken your money from the initial value to the final value in exactly that number of years. This makes it invaluable when comparing a large-cap fund held for 3 years against a mid-cap fund held for 7.

The CAGR formula

CAGR = [(Final value ÷ Initial value)^(1 ÷ N) − 1] × 100, where N is the number of years.

Worked example using NSE-listed stocks: you bought 500 shares of a Nifty 50 constituent at ₹200 each in April 2020 (invested ₹1,00,000) and sold them in April 2025 at ₹340 each (received ₹1,70,000).

• Absolute return = (1,70,000 − 1,00,000) ÷ 1,00,000 × 100 = 70%
• CAGR = (1,70,000 ÷ 1,00,000)^(1/5) − 1 = 11.20% per year

The 70% absolute return sounds impressive, but the 11.20% annual CAGR gives you the true per-year pace — directly comparable against Nifty 50's own CAGR or a peer fund's return over the same window.

How to use this calculator

• Enter the initial or purchase value of your investment in the first field.
• Enter the final or redemption value — for mutual funds, multiply units held by the current NAV.
• Enter how many years the investment was held. You can use decimals (e.g., 2.5 for 30 months).
• Read your CAGR, absolute return, and total rupee gain instantly. The result updates as you type.
• Compare the CAGR against your benchmark — for equity funds, compare against the Nifty 50 or the fund's stated benchmark index CAGR over the same period.

CAGR in mutual funds

Mutual fund performance tables always show 1-year, 3-year, and 5-year CAGR (also called point-to-point returns). To verify a fund's stated CAGR yourself: enter the NAV on your purchase date as the initial value, the NAV on your redemption date multiplied by your unit count as the final value, and the holding period. The result should match the fund house's published CAGR for that window.

Example: you invested ₹2,00,000 in a large-cap fund in April 2022 at NAV ₹40 (5,000 units). Today in April 2025 the NAV is ₹52. Final value = 5,000 × 52 = ₹2,60,000. CAGR = (2,60,000 ÷ 2,00,000)^(1/3) − 1 = 9.14% per year.

CAGR in stocks

For direct equity, CAGR lets you compare a stock you held for 2 years against one held for 5 on equal footing. Divide the selling price (or current market price) by the purchase price and apply the formula. If you received dividends, add them to the final value for a total return CAGR. Always use the same holding period for both stocks when benchmarking against each other.

CAGR vs. XIRR — which should you use?

CAGR is correct only when there is a single investment at one point in time and a single redemption at another. The moment you add more money — monthly SIPs, top-ups, partial withdrawals — CAGR breaks down because each instalment has a different holding period. Use XIRR (Excel's Extended Internal Rate of Return function) for any investment with multiple cash flows at irregular dates. Think of XIRR as an aggregation of multiple CAGRs stitched together across unequal intervals.

CAGR vs. absolute return

Absolute return answers "how much did the total value change?" CAGR answers "at what annual rate did it compound?" A 100% absolute return over 10 years is a CAGR of only 7.18%, while a 100% absolute return over 2 years is a CAGR of 41.42% — dramatically different. When evaluating performance across different holding periods, always look at CAGR, not absolute return.

What is a good CAGR?

For established large-cap companies and blue-chip funds, a 5-year revenue or NAV CAGR of 10-15% is generally considered strong. For individual equity investments, beating the Nifty 50's own CAGR over the same period is the minimum bar for outperformance. As a reference, Nifty 50 delivered approximately 13-15% CAGR over the decade to FY2025-26. Any investment that consistently outpaces this benchmark over 5 or more years is a solid performer on a risk-adjusted basis.

Limitations of CAGR

• Assumes constant growth each year — masks the real year-on-year volatility and drawdowns.
• Designed for lump-sum investments only; use XIRR when contributions happen at different points (SIPs, systematic withdrawal plans).
• Does not account for investment risk or volatility endured along the way.
• Past CAGR has no bearing on future returns.
• For risk-adjusted comparison, pair CAGR with Sharpe Ratio or maximum drawdown figures.

Frequently asked questions

What is CAGR and how is it calculated?

CAGR stands for Compound Annual Growth Rate. It tells you the annualised pace at which an investment grew from its starting value to its final value. The formula is CAGR = [(End Value ÷ Start Value)^(1÷N) − 1] × 100. Example: ₹10,000 growing to ₹15,000 in 3 years gives CAGR = (15,000 ÷ 10,000)^(1/3) − 1 = 14.47%.

What is CAGR return in mutual funds?

In mutual funds, CAGR measures the average annual growth of your lump-sum investment over a specific period. Example: you invest ₹1,00,000 at NAV ₹20 (5,000 units). Three years later you redeem at NAV ₹25. Final value = ₹1,25,000. Mutual fund CAGR = (1,25,000 ÷ 1,00,000)^(1/3) − 1 = 7.72% per year. For SIP investments use XIRR instead.

What is CAGR return in stocks?

For stocks, CAGR shows how much your equity holding has gained on an annualised basis. Buy 200 shares at ₹100 (invested ₹20,000) and sell at ₹150 two years later (received ₹30,000). Stock CAGR = (30,000 ÷ 20,000)^(1/2) − 1 = 22.47% per year over two years.

What is CAGR in banking?

In banking and fixed-income products, annualised yield is the more common measure. That said, CAGR can still be applied to compare the growth of a bank fixed deposit or recurring deposit over multiple years — enter the principal as the initial value and the maturity amount as the final value.

What is the difference between XIRR and CAGR?

CAGR is accurate when you make a single lump-sum investment with one start date and one end date. XIRR handles multiple investments or withdrawals at different dates — exactly what happens in a monthly SIP. Always use XIRR for SIP-style investing; use CAGR for straightforward lump-sum evaluation.

What is the difference between absolute return and CAGR?

Absolute return = (End − Begin) ÷ Begin × 100. It shows total growth without any time context. CAGR converts that into an annual rate. Example: ₹10,000 growing to ₹18,000 over 3 years. Absolute return = 80%. CAGR = (18,000 ÷ 10,000)^(1/3) − 1 = 21.54%. Absolute return overstates the annual pace; CAGR gives the fair per-year picture.

What is a good CAGR for an industry or company?

A revenue CAGR of 5-10% is considered solid for an established large-cap company. Companies sustaining 10-20% revenue CAGR over 5+ years are generally regarded as strong performers on the NSE/BSE. For equity investments, consistently beating the Nifty 50 CAGR over a 5-year window is the standard bar for outperformance.

What is the difference between CAGR and annualised return?

Simple annualised return extrapolates a proportional return linearly — it does not account for compounding. CAGR uses compounding, capturing the geometric effect of growth building on growth. For multi-year periods, CAGR is the more accurate and more meaningful measure.

What is the CAGR Ratio?

The CAGR Ratio simply compares two investments by dividing one CAGR by another. If Investment A delivers 12% CAGR and Investment B delivers 9% over the same period, the CAGR Ratio (A ÷ B) = 1.33, meaning A grew 33% faster per year than B. A higher ratio signals the better-performing asset, assuming similar risk profiles.

What is the difference between CAGR and rolling returns?

Rolling returns measure average annualised returns across every possible start date within a window (for example, all 3-year periods from 2015 to 2025). They eliminate the bias of a specific snapshot date and reveal how consistent a fund has been. CAGR is a point-to-point measure between two fixed dates and can be influenced by the dates chosen — a fund may show high CAGR if the end date happens to coincide with a market peak.

How do you calculate CAGR in Excel?

Use the formula =(End/Start)^(1/Years)-1 in any cell. For lump-sum investments you can also use =XIRR(values, dates) with the starting amount as a negative value on the purchase date and the ending amount on the redemption date. For SIP returns, XIRR with all monthly cash flows is the right approach.

How do you calculate CAGR for a company's financials?

Collect the starting and ending revenue from the company's P&L statement, then apply CAGR = (Ending Revenue ÷ Beginning Revenue)^(1/N) − 1. Example: revenue of ₹100 crore in FY2020 and ₹150 crore in FY2025 (N = 5 years). CAGR = (150 ÷ 100)^(1/5) − 1 = 8.45%. This is widely used by equity analysts to evaluate a company's growth trajectory relative to its sector.

What is CAGR in SIP?

For a SIP, a single CAGR figure is not meaningful because each monthly instalment has a different start date and therefore a different holding period. The correct approach is XIRR, which computes an internal rate of return across all cash flows simultaneously. A monthly SIP of ₹5,000 for 5 years with a maturity value of ₹4,00,000 implies an XIRR of approximately 15-16% depending on the fund's NAV trajectory.

When should you use CAGR?

Use CAGR to evaluate mutual fund performance over 1, 3, or 5-year windows; to compare two NSE-listed stocks held over different periods; to benchmark a portfolio against Nifty 50 or Nifty Midcap 150; or to track a company's revenue or profit CAGR across financial years. Use XIRR for any investment with multiple cash flows at different intervals.

Why is CAGR widely used?

CAGR removes the distortion caused by short-term volatility by smoothing annual fluctuations into a single representative rate. It enables fair comparison between a fund that rose 40% in year 1 and fell 10% in year 2 against one that grew 12% steadily. CAGR also incorporates compounding — the geometric mean of growth — which is more accurate than a simple average of annual returns.

How do you convert an absolute return into CAGR?

Absolute return = (End − Begin) ÷ Begin × 100. To convert to CAGR you need the holding period: CAGR = (1 + Absolute Return ÷ 100)^(1/N) − 1. Example: a 50% absolute return over 2 years gives CAGR = (1.50)^(0.5) − 1 = 22.47%. The longer the holding period, the lower the CAGR equivalent of any given absolute return.

Which is better for evaluating investments — IRR or CAGR?

For a straightforward lump-sum with a single start and end date, IRR and CAGR give identical results. IRR is the more general tool — it handles unequal cash flows such as real estate rental income or staged project drawdowns. For simple lump-sum portfolio evaluation, CAGR is faster and easier to interpret and communicate.

Can this calculator measure mutual fund returns?

Yes, for lump-sum mutual fund investments. Enter the NAV at the time of purchase as the initial value, the current or redemption NAV multiplied by your unit count as the final value, and the holding period in years. The CAGR shown reflects the fund's annualised growth over that window, which you can directly compare against the fund's benchmark index.

Can this calculator be used for SIP investments?

No. CAGR is not the right metric for SIPs because each monthly instalment compounds for a different duration. For SIP returns, use an XIRR calculator or Excel's XIRR function with all your monthly investment dates and the final maturity value. This CAGR calculator is best used for one-time lump-sum investments — a stock purchase, a lump-sum mutual fund investment, a fixed deposit, or business revenue growth over a defined period.

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