How it works
CAGR smooths out uneven year-to-year changes into one constant annual rate. It's the rate at which the starting value would have to compound each year to reach the ending value.
Because it hides volatility, CAGR says nothing about the ups and downs in between. Use it to compare growth over the same period, not to predict future years.
CAGR = (End value / Start value)^(1 / years) − 1Worked example
Revenue grew from ₹50 lakh to ₹1.2 crore over 5 years. CAGR = (1,20,00,000 / 50,00,000)^(1/5) − 1 = 2.4^0.2 − 1 = 19.1% a year, while total growth was 140%.