PhysicsWallah shares close 44% higher than IPO price on debut day, beat estimates: Should you buy, sell or hold?

PhysicsWallah listing ceremony at NSE

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26 Aug, 2025 12:21

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The shares of PhysicsWallah jumped further after making a strong market debut on November 18, significantly beating grey market expectations.

The shares of the company listed at 145 apiece on NSE, marking a premium of more than 33 percent from the IPO price of Rs 109 apiece. The stock then jumped nearly 12 percent since listing to hit its day's high at Rs 161.99 apiece so far. This marked a rise of around 49 percent higher from the IPO price.

However, the stock then erased some gains as investors may have resorted to profit-booking, and closed at Rs 156.49 apiece on its debut day. It is still around 8 percent higher than its listing price, and nearly 44 percent higher than its IPO price.

Its market capitalisation at the end of the debut day stood at Rs 44,751.33 crore.

The strong market debut has beaten grey market expectations. Ahead of listing, the unlisted shares of the company were trading with around 13 percent grey market premium (GMP) over the IPO price, according to data on Investorgain.

The grey market estimates have significantly improved over the recent days, after hitting zero percent on the day the IPO closed for public bidding (November 13).

PhysicsWallah began its market journey with a great opening, reflecting investor confidence in the company's strong brand recall, affordable test-prep offerings, and fast-growing hybrid model through both online platforms and PW Pathshala centers, said Shivani Nyati, Head of Wealth at Swastika Investmart.

The analyst noted that the company's strengths include a loyal student base, scalable digital content engine, expanding offline footprint, and diversified presence across JEE, NEET, UPSC, and state-level exams. However, competition from other edtech and offline coaching giants, regulatory uncertainties in the education sector, and the challenge of sustaining profitability during expansion remain key risks.

"The IPO garnered healthy retail participation, supported by expectations of continued demand for hybrid learning and deeper penetration in Tier II–III markets. Allottees may book partial profits and hold the remaining shares for medium-term growth with SL 130," Nyati added.

Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara, however advised caution. He noted that at current valuations, the real test is how a business converts millions of free users into paying subscribers while tightening its cost structure.

"If PhysicsWallah manages to prove that regional expansion and hybrid models can give steady margins, it earns long-term credibility," he added.

"There is value in the scale it can achieve, but the key headwinds are the presence of players like Unacademy, Byjus, and a hybrid mall, which scales slower than a pure platform play. With a stretched valuation, execution capability to achieve rapid, sustainable growth while retaining top educational talent would be the key if returns are to be made mid to long term," said Shravan Shetty, Managing Director, Primus Partners.

Bhavik Joshi, Business Head at INVasset PMS, noted that the company’s evolution from a single YouTube channel to a multi-format learning ecosystem spanning over 300 offline and hybrid centers underscores its deep student connect and content credibility.

"However, profitability remains elusive, with cumulative losses exceeding ₹1,400 crore across FY23–FY25. The negative earnings base and a steep valuation multiple make this IPO a play on long-term execution rather than immediate returns. While proceeds from the fresh issue are being directed toward aggressive offline expansion, tech infrastructure, and marketing, the operational turnaround timeline will be critical," Joshi said.

"Investors with a high risk appetite and a long-term horizon may consider limited participation, betting on eventual operating leverage and monetization of its vast user base. For conservative investors, however, the negative P/E and cash flow pressures suggest waiting until the business demonstrates consistent profitability," he added.

"Valuation is a key red flag as it is trading at 10.8x Price to Sales despite being loss making. The business also faces key person risk due to heavy dependence on founder Alakh Pandey, and its 303 offline centers create high rental and execution pressures. With the edtech sector still affected by the post Byju’s fallout, PW’s rising costs against 33% revenue growth in Q1 FY26 raise doubts about margin sustainability," said Abhinav Tiwari, Research Analyst at Bonanza.

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