PhysicsWallah IPO opens tomorrow, GMP declines: Here's why brokerages are 'Neutral' on the Rs 3,480-crore IPO

PhysicsWallah IPO: Should you apply?

The initial public offering of PhysicsWallah is set to open for public subscription tomorrow, November 11. Despite strong investor buzz around the IPO in the market, grey market estimates signal towards a tepid listing for the edtech platform.

Ahead of listing, the unlisted shares of the company were trading with 2.75 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. This is lower than the 3.67 percent GMP quoted by the site yesterday, and 4.59 percent quoted last week.

According to IPO Watch, the unlisted shares of the company were trading with 3.66 percent GMO over the IPO price, ahead of listing.

About PhysicsWallah IPO:

PhysicsWallah will launch its IPO to raise Rs 3,480 crore through a fresh issue of shares worth Rs 3,100 crore and an offer for sale (OFS) of shares worth Rs 380 crore. The IPO will remain open for public bidding between November 11 and November 13 at a price band of Rs 103-109 per share.

Investors can bid for a minimum of 137 shares, requiring an investment of Rs 14,933 at the upper price band, and in multiples thereafter. The company is targeting a valuation of over Rs 31,500 crore at the upper end of the price range.

The allotments will likely be finalized by November 14, and the shares are scheduled to list on stock exchanges on November 18.

SBI Securities on PhysicsWallah IPO:

SBI Securities remains 'Neutral' on the IPO, adding that it would like to monitor the performance of the company post listing. The domestic brokerage noted that the company which offers test-preparation courses for competitive examinations and other upskilling courses is among the top 5 edtech companies in terms of revenue in India.

However, PhysicsWallah's net loss widened from Rs 81 crore in FY23 to Rs 216 crore in FY25 due to higher depreciation expenses and impairment losses on financial assets. "At upper price band of Rs 109, the issue is valued at EV/Sales multiple of 9.7x based on the post-issue capital, which seems fairly valued," SBI Securities said.

Angel One on PhysicsWallah IPO:

Angel One said that PhysicsWallah's financials cannot be compared on a P/E basis as it remains a loss-making company, with no listed like-to-like peers in the Indian ed-tech space. "While the company continues to deliver strong revenue growth and enjoys high brand recall, profitability remains constrained by rising competition and elevated scaling costs. Hence, we assign a 'Neutral' rating, recommending investors to wait for clearer earnings visibility before taking a long-term position," it said.

"At its upper-band valuation, PW trades at a premium to traditional education players like MT Educare or CL Educate, justified only if its growth sustains above 25–30% CAGR in the next three years. The listing will test whether India’s edtech can transform from valuation-driven exuberance to long-term, profit-backed credibility," said Harshal Dasani, Business Head, INVasset PMS.

Key risks for PhysicsWallah IPO:

Listing out the key risks, SBI Securities said that PhysicsWallah's success depends on its ability to attract new and retain existing faculty members and students. While most of the employment contracts have non-compete and exclusivity clauses with applicable fees in case of breach, there is no assurance that the faculty members will abide by the obligations included in these agreements.

Additionally, it added that the company is highly dependent on its founders – Alakh Pandey and Prateek Boob. Alakh Pandey is responsible for overall business health of the company, while Prateek Boob is responsible for directing strategies and innovation planning. If these founders discontinue their services, or join competitors or start new test preparation centers, then PhysicsWallah's brand, reputation, student enrolments and business could be adversely affected, the domestic brokerage added.

Lastly, the company competes in a market which continuously sees updates in curriculum, teaching and testing methods. The curriculum, examination format, duration or difficulty of examinations in the test preparatory Education categories offered by the company may be altered, updated or revised either by government order or by the relevant testing agencies. As a result, PhysicsWallah's study materials, coaching and testing methodologies and structure of the courses may have to be modified, it said.

Angel One also noted that execution challenges from rapid offline expansion along with continued losses and uncertain profitability remain key risks to the IPO.

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