PhysicsWallah IPO opens today: Brokerages cautious on valuation, profitability amid strong growth potential

Brokerages have taken a guarded stance on the much-anticipated IPO of edtech firm PhysicsWallah Ltd, which opens for public subscription today, November 11. While analysts acknowledge the company’s strong brand recall, rapid growth and expansive omnichannel presence, most have issued ‘Neutral’ calls citing sustained losses, execution risks, and valuation concerns.

Strong anchor book ahead of PhysicsWallah IPO

On the eve of the IPO, PhysicsWallah raised Rs 1,562.8 crore from 57 institutional investors through its anchor book. Global names such as Goldman Sachs, Franklin Templeton, Fidelity Funds, and Eastspring Investments participated alongside Indian fund houses including ICICI Prudential MF, Kotak Mahindra AMC, Nippon Life India, Aditya Birla Sun Life, and Tata MF. Domestic mutual funds accounted for over 55 percent of the anchor allocation through 35 schemes.

The edtech platform, backed by WestBridge Capital, Hornbill Capital, and GSV Ventures, aims to raise Rs 3,480 crore in total -- comprising a fresh issue of Rs 3,100 crore and an offer for sale of Rs 380 crore -- at a price band of Rs 103-109 per share. The proceeds will be used primarily for expansion of offline and hybrid learning centres, marketing, cloud infrastructure, and strategic acquisitions. The issue closes on November 13, with listing slated for November 18.

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PhysicsWallah IPO details and scale

At the upper end of the price band, the IPO values PhysicsWallah at about Rs 31,500 crore. Investors can bid for a minimum of 137 shares, translating to Rs 14,933 per lot. The company has expanded rapidly from 28 centres in FY23 to 303 centres by June 2025, serving 4.46 million paid users across 13 education categories. Revenue grew from Rs 744 crore in FY23 to Rs 2,887 crore in FY25, while EBITDA turned positive at Rs 193 crore. However, the firm remains loss-making, posting a net loss of around Rs 243 crore in FY25.

Brokerage views: Should you subscribe to PhysicsWallah IPO?

SBI Securities shared a ‘Neutral’ view on PhysicsWallah IPO. It cited the company’s leadership in affordable test-prep and its strong digital footprint -- 13.7 million YouTube subscribers and nearly 4.5 million paid users, but flagged valuation risk. At the upper band, the IPO is valued at 9.7 times EV/Sales based on post-issue capital, which the brokerage termed “fairly valued”. SBI Securities highlighted the widening losses, dependence on star faculty and founders, and execution challenges from rapid offline expansion as key concerns.

Angel One also assigned a ‘Neutral’ rating, noting that PhysicsWallah lacks listed peers and cannot be assessed on a P/E basis given its continuing losses. The brokerage acknowledged the company’s strong revenue trajectory and brand equity but warned that rising competition and scaling costs continue to weigh on margins. “Investors may wait for clearer earnings visibility before taking a long-term position,” it said.

Anand Rathi assigned a “Subscribe - Long Term” rating to the PhysicsWallah IPO, highlighting the company’s rapid expansion and strong digital-to-offline integration. The brokerage noted that PhysicsWallah’s hybrid model and affordable pricing have enabled it to build one of India’s largest student communities, with paid users growing at a 59 percent CAGR between FY23 and FY25. It said the company’s efforts to broaden its course portfolio, invest in technology, and expand into new regions position it well for sustained growth. At the upper price band, Anand Rathi valued the issue at 10.8x FY25 price-to-sales, calling it “fully priced”.

Key risks flagged

Brokerages pointed to dependence on founders Alakh Pandey and Prateek Boob, retention of key faculty, and evolving exam formats as significant operational risks. Any disruption in leadership or curriculum changes could affect enrolments and brand perception. Profitability pressures, stemming from expansion and marketing costs, also remain a concern.

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