Alakh Pandey-led PhysicsWallah IPO opens for subscription today, November 11. With valuations being a key point of consideration, all eyes are on the pricing of the issue. The Rs 3,480 crore IPO is available for a sales multiple of 9-10x.
Many brokerages view the IPO as fairly valued. Here is a detailed analysis
SBI Securities on PhysicsWallah IPO
Talking about the company’s key financials, SBI Securities, in an IPO note, stated that over the last three years, PhysicsWallah has delivered Sales/EBITDA CAGR of 96.9% and 88.8% respectively. However, the company’s net loss has 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 the upper price band of Rs 109, the issue is valued at an EV/Sales multiple of 9.7x based on the post-issue capital, which seems fairly valued. We maintain a ‘Neutral’ view on the issue and would like to monitor the performance of the company post listing,” added SBI Securities.
The company, which started on a YouTube channel, has grown big enough for an IPO. One of the major ed-tech firms sells its flagship online JEE and NEET courses at a fraction of what its competitors charge. It sells the JEE course for Rs 4,500 against peers’ Rs 75,000–80,000 and NEET for Rs 4,800 vs. peers’ Rs 63,000–67,000, a deliberate low-price, high-reach play.
SBI Securities is of the view that the low pricing only works if volume and low acquisition costs back it up, and here PhysicsWallah’s unit metrics are instructive. To give you a context, the company reported 4.13 million unique transacting online users, with an average collection per online user (ACPU) being Rs 3,682, and Rs 14,040 million of online revenue, which makes 48.6% of its FY25 revenue.
InCred Equities on PhysicsWallah IPO
InCred Equities said that the company is all set to disrupt the edtech space with its strong moat and business expansion, despite stretched valuation. “At the upper end of the price band, the initial public offer (IPO) is valued at an EV/sales multiple of 10.7x based on post-issue capital,” said InCred Equities.
As the business scales up, InCred Equtiies expect profitability over the medium- to long-term. However, brand reputation among the student community is sensitive. Another risk is dependence on the promoter’s face value and the high attrition rate of the faculty or talent.
Anand Rathi Research on PhysicsWallah
Anand Rathi Research in an stated that at the upper price band, PhysicsWallah is valued at 48.8x P/S (Price/Sales). This valuation is applied based on a post-issue market capitalisation of Rs 31,170 crore. B
PhysicsWallah has demonstrated significant growth over the years in both online and offline business verticals. The company has increased student engagement, leading to an enhanced brand recall. The company has expanded and enhanced offerings across multiple Education categories. Along with providing education online, it has grown into offline and hybrid channels of delivery.