At a time when rising global tension and inflation worries are making investors cautious, some core domestic themes continue to be in focus. Edtech is one such space. The share price of one of the recently listed Edtech counter, PhysicsWallah has fallen 5% in the last 5 days. But JM Financial report noted that they, “see PhysicsWallah as a ‘recession-proof’ sweet spot at a time when investors are increasingly worried about the possibility of elevated global crude oil prices and depreciating currency translating into higher inflation.”
Here is a detailed analysis of the investment rationale driving JM Financial’s assessment-
A stock that could benefit from slowdown. According to the JM Financial report, PhysicsWallah stands out because its business model aligns with how consumers behave during tough times. Instead of cutting education expenses, households tend to shift towards more affordable options.
The brokerage house JM Financial has maintained a ‘Buy’ rating on this Edtech stock, with a target price of Rs 110. This suggests a potential upside of around 22% from current levels.
Why affordability is a key advantage
The core point from the brokerage report is that PhysicsWallah’s low-cost offerings make it attractive compared to traditional coaching institutes.
As per the brokerage report, “PhysicsWallah remains well positioned to gain amidst macro headwinds due to its core value proposition of affordability and quality.”
In India, education is often seen as essential spending. The report highlighted this behavioural trend, noting, “In the Indian context, education is a non-discretionary priority – it is the expense households are least willing to cut.”
Digital model gives it an edge
Another key factor the company highlighted in its report is the company’s digital-first model. Unlike traditional offline coaching centres or logistics-heavy businesses, this edtech stock operates with minimal dependence on physical infrastructure.
The report noted, “PhysicsWallah’s digital delivery model is fundamentally decoupled from fuel prices.”
This becomes important in a rising fuel cost environment, where many companies see margins getting squeezed. PhysicsWallah, on the other hand, remains relatively insulated.
The brokerage further added, “This unique insulation from energy shocks positions the company as a superior defensive play.”
Growth backed by changing learning trends
Beyond macro factors, structural changes in education are also supporting the company. There is a growing shift towards hybrid learning, especially in smaller cities.
According to the brokerage report, the company “benefits from growing preference for hybrid learning models across tier-2+ cities,” which expands its reach and potential customer base.
The online segment is assigned a higher valuation multiple of 30 times Adjusted EBITDA, while the offline segment is valued at 15 times Adjusted EBITDA.
Furthermore, the report added, “we see strong growth visibility and potential for margin expansion,” particularly in the digital business.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.