PhysicsWallah IPO Opens for Subscription; Analysts See Growth Potential but Warn on Valuations

PhysicsWallah IPO Opens for Subscription Analysts Cautious on Valuation and Profitability Despite Strong Growth Potential

The much-anticipated PhysicsWallah IPO opened for public subscription today, November 11, marking one of the most closely watched listings in India’s fast-evolving edtech sector. Despite its strong brand equity, rapid revenue growth, and extensive omnichannel presence, brokerages remain cautiously optimistic, flagging concerns over valuation, execution challenges, and sustained profitability.

Strong Anchor Book Participation Reflects Investor Confidence in PhysicsWallah IPO

Ahead of its public issue, PhysicsWallah successfully raised ₹1,562.8 crore from 57 institutional investors through its anchor book. The anchor round drew participation from global investment heavyweights including Goldman Sachs, Franklin Templeton, Fidelity Funds, and Eastspring Investments.

Domestic mutual funds were equally enthusiastic, with major fund houses such as ICICI Prudential MF, Kotak Mahindra AMC, Nippon Life India, Aditya Birla Sun Life, and Tata MF taking part. Notably, over 55% of the anchor allocation came from domestic mutual funds via 35 schemes—highlighting strong institutional confidence.

Backed by WestBridge Capital, Hornbill Capital, and GSV Ventures, PhysicsWallah plans to raise ₹3,480 crore in total—comprising a fresh issue of ₹3,100 crore and an offer for sale of ₹380 crore. The price band is set between ₹103–₹109 per share, with the issue closing on November 13 and listing expected on November 18.

The funds raised will be used for expanding offline and hybrid learning centres, marketing initiatives, cloud infrastructure, and strategic acquisitions to strengthen its market position in India’s test-prep and learning segment.

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PhysicsWallah’s Growth Story: Rapid Expansion but Profitability Still a Concern

At the upper price band, PhysicsWallah’s valuation stands at around ₹31,500 crore, making it one of the most valuable players in the Indian edtech landscape. The company’s growth trajectory has been remarkable—expanding from just 28 centres in FY23 to 303 centres by June 2025. It currently serves 4.46 million paid users across 13 education categories, supported by a large digital ecosystem that includes 13.7 million YouTube subscribers.

Financially, the company has scaled up its revenue base from ₹744 crore in FY23 to ₹2,887 crore in FY25, with EBITDA turning positive at ₹193 crore. However, the firm continues to post net losses of about ₹243 crore in FY25, driven by aggressive expansion, marketing spends, and rising operational costs.

Brokerages Split on PhysicsWallah IPO: Neutral to Long-Term Subscribe Calls

SBI Securities: Neutral on Valuation Concerns

SBI Securities has issued a ‘Neutral’ rating on the PhysicsWallah IPO, citing its market leadership in affordable test-prep, robust digital reach, and diversified user base. However, it flagged concerns about valuation—highlighting that at the upper price band, the IPO is valued at 9.7x EV/Sales (post-issue), making it “fairly priced.”

The brokerage also raised caution over dependence on key founders, execution challenges arising from rapid offline expansion, and the sustainability of margins amid high marketing and infrastructure costs.

Angel One: Wait-and-Watch Approach Recommended

Angel One echoed similar sentiments, maintaining a ‘Neutral’ stance. The brokerage emphasized that since the company remains loss-making, traditional P/E valuation metrics cannot be applied. While acknowledging PhysicsWallah’s strong revenue growth and brand strength, Angel One warned that rising competition, increasing content costs, and scaling inefficiencies could weigh on profitability.

“Investors may wait for clearer earnings visibility before taking a long-term position,” the note said, underlining the need for sustained performance before re-rating.

Anand Rathi: Subscribe for Long-Term Growth

In contrast, Anand Rathi offered a ‘Subscribe – Long Term’ recommendation, highlighting PhysicsWallah’s strong hybrid learning model and affordable pricing strategy as differentiators. The brokerage noted that the company’s ability to blend online and offline ecosystems has enabled it to build one of India’s largest student communities, with paid user growth at a 59% CAGR between FY23 and FY25.

Anand Rathi valued the issue at 10.8x FY25 price-to-sales, calling it “fully priced but supported by a robust long-term growth narrative.”

Key Risks and Outlook for PhysicsWallah IPO Investors

Brokerages agree that while PhysicsWallah’s scale and brand strength are undeniable, several risks remain in play.

• Dependence on Founders and Faculty: The firm’s success is closely tied to founders Alakh Pandey and Prateek Boob, along with key faculty members. Any disruption could impact student retention and brand perception.

• Profitability Challenges: Despite positive EBITDA, net losses continue to widen due to high spending on expansion and marketing.

• Execution Risks: Rapid offline scaling poses operational and cost management challenges.

• Evolving Exam Formats: Changes in syllabus and testing patterns could affect enrolment demand.

Bottom Line: PhysicsWallah IPO Balances Growth Promise with Valuation Risks

The PhysicsWallah IPO represents a powerful growth story in India’s education sector—driven by affordability, scale, and brand loyalty. Yet, the issue also demands investor discretion given the high valuation, persistent losses, and operational execution risks.

For long-term investors, the IPO may offer exposure to a unique hybrid edtech franchise poised to benefit from the next wave of education digitization. However, near-term volatility and profitability concerns mean cautious optimism is warranted.

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