PhysicsWallah, one of the few new-age tech stocks to list on Dalal Street last year, could rally up to 58% from its current market price, according to domestic brokerage Motilal Oswal, which has initiated coverage on the stock with a ‘buy’ rating.
The brokerage has set a target price of ₹200 apiece, indicating a 58% rally from the stock’s Friday closing price of ₹126.42. Motilal Oswal’s bullish view is supported by PhysicsWallah’s capital-efficient business model and strong growth prospects across its online and offline offerings.
In its latest report, Motilal Oswal highlighted that PhysicsWallah has one of the most capital-efficient business models in Indian EdTech, enabling it to acquire students at structurally lower costs and monetise them across online, hybrid, and offline offerings.
The brokerage noted that the company has built communities with 100 million-plus YouTube subscribers and has compounded its revenue at around 74% CAGR over FY23-26. This strong track record, coupled with the relatively low penetration in several education segments, provides further scope for growth, according to the brokerage.
Motilal Oswal also highlighted that while online penetration in flagship categories such as JEE and NEET is only around 20%, penetration in newer segments, including foundation, state boards, and government exams, remains below 1%, providing a long runway for digital adoption.
Profitability to improve in offline business
Motilal Oswal views the offline business as a higher-ARPU monetisation layer and expects profitability to improve as recently opened centres mature and utilisation increases. The brokerage expects offline revenue to post around 20% CAGR over FY26-30E.
While execution remains a key monitorable, Motilal Oswal noted that PhysicsWallah has built one of India’s fastest-growing offline coaching networks, with 353 centres.
At the same time, the brokerage said the online business remains PhysicsWallah’s primary value driver and estimates online revenue to clock around 28% CAGR over FY26-30E, supported by paid-user growth, deeper category expansion and AI-led monetisation.
Motilal Oswal expects pre-Ind AS EBITDA margins to improve from around 26% in FY26 to 30% by FY28E, driven by operating leverage and customer acquisition efficiencies.
50x multiple for online business
Motilal Oswal values PhysicsWallah on a sum-of-the-parts (SoTP) basis. For the online business, the brokerage assigns a 50x FY28E EV/EBITDA multiple, reflecting its market leadership, structurally superior unit economics, and scalable technology platform, resulting in a per-share value of ₹172.
The brokerage values the offline business at 15x FY28E EV/EBITDA, considering its execution intensity, lower-margin profile, regional competition, and capital requirements, contributing ₹4 per share. Other businesses are valued at 1x FY28E EV/sales, contributing ₹1 per share.
However, Motilal Oswal identified several key risks, including higher competitive intensity, weaker offline execution and center utilisation, higher faculty attrition that could affect student outcomes and brand perception, and adverse regulatory changes affecting coaching institutes, advertising, or data privacy.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
