PhysicsWallah, the first edtech to list on Indian exchanges, made its public market debut with a strong listing and price surge in early trade. The investor enthusiasm is in sharp contrast to the tepid response during the company’s initial public offering (IPO).
The edtech unicorn’s stretched valuation in the backdrop of widening losses has raised red flags for some. The maiden public issue valued PhysicsWallah at Rs 31,500 crore (around $3.6 billion), 30% higher than its $2.8-billion valuation after closing a $210-million funding round in September 2024 that was led by Hornbill Capital and Lightspeed. By 1:20 p.m. on listing day, with a 38.7% rise over the IPO price, the company’s market capitalisation was around Rs 43,253 crore on the BSE.
PhysicsWallah saw its net loss widen to Rs 127 crore from Rs 72 crore during the quarter ended June due to higher depreciation expenses and impairment losses on financial assets. Operating revenue grew 33% to Rs 847 crore, while expenses rose 39% to Rs 1,057 crore.
The company was also impacted on an operating basis, as it reported an Ebitda loss of Rs 21 crore in the April-June quarter, against an operating profit of Rs 9 crore in the year-ago period.
‘Hyper-growth phase’
Talking to ET on the eve of the PhysicsWallah IPO, cofounder Prateek Maheshwari said the increase in IPO valuation was in line with the company’s fourfold revenue growth over the past two years.
The company is in a “hyper-growth phase”, Maheshwari said. “I am already sitting on a large treasury. That's comfort capital,” he added. “We wanted to go public now and make everyone grow. Otherwise, the sentiment will taper…and investors will start to sell. We don't want that. We want to go public when we are in a hyper-growth phase.”
Growth justifies valuation: analysts
Some analysts consider PhysicsWallah’s valuation inflated, while others find it fairly valued. However, there seems to be a consensus on its growth prospects, even as the edtech sector grapples with the fallout of Byju’s implosion.
Incred Equities said the valuation “seems to be stretched”, but the company is “well-placed to disrupt the edtech space” with a strong moat and revenue growth. The equities research firm expects profitability over the medium- to long-term as the business scales up.
Brokerage Anand Rathi found the PhysicsWallah IPO “fully priced in”, considering its plans to expand into new regions, expand the student base, broaden the course portfolio, launch new education categories, and introduce value-added services.
However, sensitive brand reputation among students, dependence on the promoter (Alakh Pandey’s) name, and a high faculty attrition rate can potentially hinder growth, the analysts at Incred said.
The edtech unicorn’s stretched valuation in the backdrop of widening losses has raised red flags for some. The maiden public issue valued PhysicsWallah at Rs 31,500 crore (around $3.6 billion), 30% higher than its $2.8-billion valuation after closing a $210-million funding round in September 2024 that was led by Hornbill Capital and Lightspeed. By 1:20 p.m. on listing day, with a 38.7% rise over the IPO price, the company’s market capitalisation was around Rs 43,253 crore on the BSE.
PhysicsWallah saw its net loss widen to Rs 127 crore from Rs 72 crore during the quarter ended June due to higher depreciation expenses and impairment losses on financial assets. Operating revenue grew 33% to Rs 847 crore, while expenses rose 39% to Rs 1,057 crore.
The company was also impacted on an operating basis, as it reported an Ebitda loss of Rs 21 crore in the April-June quarter, against an operating profit of Rs 9 crore in the year-ago period.
‘Hyper-growth phase’
Talking to ET on the eve of the PhysicsWallah IPO, cofounder Prateek Maheshwari said the increase in IPO valuation was in line with the company’s fourfold revenue growth over the past two years.
The company is in a “hyper-growth phase”, Maheshwari said. “I am already sitting on a large treasury. That's comfort capital,” he added. “We wanted to go public now and make everyone grow. Otherwise, the sentiment will taper…and investors will start to sell. We don't want that. We want to go public when we are in a hyper-growth phase.”
Growth justifies valuation: analysts
Some analysts consider PhysicsWallah’s valuation inflated, while others find it fairly valued. However, there seems to be a consensus on its growth prospects, even as the edtech sector grapples with the fallout of Byju’s implosion.
Incred Equities said the valuation “seems to be stretched”, but the company is “well-placed to disrupt the edtech space” with a strong moat and revenue growth. The equities research firm expects profitability over the medium- to long-term as the business scales up.
Brokerage Anand Rathi found the PhysicsWallah IPO “fully priced in”, considering its plans to expand into new regions, expand the student base, broaden the course portfolio, launch new education categories, and introduce value-added services.
However, sensitive brand reputation among students, dependence on the promoter (Alakh Pandey’s) name, and a high faculty attrition rate can potentially hinder growth, the analysts at Incred said.