Formula
(This period FCF - last period FCF) / last period FCF. Both periods need a consistent definition, and the start should not be near zero.
What it means
Free cash flow growth is harder to sustain than profit growth because working capital and capital expenditure move around. A smooth FCF line is unusual.
Direction over several years matters more than one jump.
How to read it
FCF growing with profit means earnings are turning into cash. Profit growing while FCF shrinks means the growth is being absorbed by investment or by the operating cycle.
What to watch
A growth rate off a very small or negative base is not interpretable. Show the rupee amounts. Also do not call a one-year cut in capex "growth" in the earning power of the firm.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.