PhysicsWallah’s first week on the stock market has turned out to be a rather rough one. After delivering strong listing gains on November 18, the edtech company has now slipped into its second straight day of steep selling.
PhysicsWallah: Two-day fall wipes out a big chunk of gain
PhysicsWallah shares price dropped more than 11% intra-day, continuing the decline that began earlier this week. On the Bombay Stock Exchange (BSE), the stock is down Rs 127.80 (-10.97%), while on the National Stock Exchange (NSE), it is trading at Rs 126.65 (-11.61%) at 1:00 PM IST today.
Even after the fall, the share price is still over 20% higher than its Initial Public Offering (IPO) price of Rs 109 per share.
PhysicsWallah: Market cap slips sharply
PhysicsWallah’s market value has taken a significant hit in just three sessions. At its debut-day peak, the company touched an estimated market capitalisation of around Rs 46,300 crore.
Today, the numbers have dropped to –
- Rs 36,604 crore on BSE
- Rs 35,789 crore on NSE
Using the BSE number, the company has lost nearly Rs 9,700 crore in market value in just three sessions.
That is nearly 21% wiped out in a very short period.
PhysicsWallah: Why did the listing day euphoria fade away
PhysicsWallah started strong. It listed at Rs 145 on NSE and Rs 143.10 on BSE, giving investors 36% listing gains compared to its IPO issue price of Rs 109. By the end of the first day, it reached Rs 156.49, taking listing-day gains close to 44%. Many analysts believe that the offline classes area drag on the profitability. Financialexpress.com spoke to a host of market analyst on November 17 and they said long term profitability is crucial.
Speaking on the PhysicsWallah issue, Deven Choksey, Managing Director of DRChoksey FinServ raised two key concerns. He believes that the USP of the business model is technology-enabled and replaceable, “I think there is no unique proposition per se in this company. Technology and the platform are enablers; they are not substitutes. I think the online model gives the strength of a demography and distribution. The substitution for this entire activity is only the product and the product innovation. I think the product innovation proposition is not being seen as loud as it has been claimed in the IPO prospectus.”
Another concern raised by him is about “paying such kind of value for a small size of profit or for that matter, losses that the company is earning. History has proved time and again that valuation based on revenue can never be sustained post listing. So one has to be careful.”
Sunny Agrawal – Head of Fundamental Research, SBI Securities expects the IPO to list at par. “The company has been doing pretty well, with steady sales/EBITDA. However, offline business is a drag on the profitability of the company. As a result, the street would like to have more clarity on the path to profitability. It needs a clearer understanding of when the offline business starts delivering – how it is going to shape up.”
PhysicsWallah: Subscription recap
The Rs 3,480 crore IPO was subscribed nearly 2 times, with –
Retail investors: 106% subscription
Non-Institutional Investors (NIIs): 48%
Qualified Institutional Buyers (QIBs): 2.7 times
However, once the early excitement faded, profit-booking kicked in. Many short-term investors who made gains on day one began exiting, which added pressure on the stock.
About the company: From YouTube channel to D’Street debut
PhysicsWallah started in 2016 when Alakh Pandey uploaded free physics lessons on YouTube. The platform grew rapidly during the pandemic and now runs 303 offline centres across 152 cities in India and the Middle East.
The company reported 49 percent revenue growth in FY25, and its losses narrowed from Rs 1,131 crore to Rs 243 crore.