PhysicsWallah shares surged up to 6% following Motilal Oswal's initiation of coverage with a ₹200 target price, reflecting optimism about the edtech company's robust revenue growth and expanding learner base.
- Shares jumped 6% intraday after Motilal Oswal initiated coverage with a ₹200 target
- Revenue CAGR of 74% from FY23 to FY26; online revenue expected to grow 28% CAGR through FY30
- Key risks include competition, offline business challenges, faculty attrition, and regulatory changes
What happened
Shares of PhysicsWallah rose as much as 6% to an intraday high of ₹127.80 on the BSE after Motilal Oswal initiated coverage on the company with a 'Buy' rating and a target price of ₹200. The stock trimmed some gains but remained up 5.3% at ₹127 as of 11:00 IST, with the company's market capitalization around ₹36,768.7 crore ($3.8 billion).
Motilal Oswal highlighted PhysicsWallah’s revenue growth at a compound annual rate of approximately 74% between fiscal years 2023 and 2026. The brokerage praised the company's YouTube-led model that attracts over 100 million subscribers, providing a large funnel for converting prospective learners into paying users across online, hybrid, and offline formats.
Why it matters
PhysicsWallah operates in India’s vast education market, estimated at ₹15-₹16 lakh crore, with substantial room for growth in online education penetration. While categories like JEE and NEET have around 20% online adoption, many areas such as foundation courses and state board education remain almost untouched, presenting expansion opportunities for the company.
The company’s ability to increase paid users, diversify into new education segments, and leverage AI for monetization is expected to drive online revenue growth at a 28% CAGR through FY2030. Additionally, operating margins are projected to improve from 26% in FY26 to 30% by FY28 due to cost efficiencies and operating leverage, underscoring strong scalability potential.
What to watch next
Investors should monitor PhysicsWallah’s execution in offline business units, faculty retention, and response to competitive pressures, which are noted risks by Motilal Oswal. Regulatory developments affecting edtech and education sectors also pose uncertainty.
The company’s Q1 FY27 results showed a 24.4% year-over-year revenue increase to ₹1,054 crore and a narrowing net loss, with adjusted EBITDA rising significantly. PhysicsWallah aims to achieve group-level profitability by Q3 FY27, its typically strongest quarter, offering a key milestone to watch.