The purpose of this research is to empirically test the forecasting power of a well-known assetvaluation model, the dividend discount model. It examines if there exists a reliability on this model by estimating the difference between intrinsic values predicted by this model and realized returns at varied expected growth rate in dividends. The objectives of the study is to examine the various variables used to predict the share prices of selected mid cap companies using DDM. Also, to evaluate the stock prices of selected companies using DDM in the view of market uncertainties. To compare the valuated stock’s intrinsic value with their market stock value resulting in their overvaluation and undervaluation and to derive an outcome of tested applicability of DDM model for investors to take decisions. All the 10 selected Midcap Stocks are overvalued by Dividend Discount Model and there isa significance difference between intrinsic value and market value as on July 31st 2021. The mean of Intrinsic value and market value of 10 selected midcap stocks are significantly varying. The results suggest that there exist significant differences between the returns forecasted by the dividend discount model and the realized returns.

Dividend Discount Model, CAPM, Equity, Returns, Investment, Stock Market