PhysicsWallah shares surge over 4% after Motilal Oswal initiates coverage with Buy rating. Should you buy?

PhysicsWallah shares surged more than 4%, touching an intraday high of Rs 126.75 on the National Stock Exchange (NSE) in early trade on Friday after Motilal Oswal initiated coverage on the education technology company with a ‘Buy’ rating and a target price of Rs 200.

Motilal Oswal’s target price implies an upside of about 66% from its reference price of Rs 121. The brokerage described PhysicsWallah as one of India’s most capital-efficient education platforms, supported by its low-cost customer-acquisition model, affordable courses, and expanding online and offline presence.

Over the past month, PhysicsWallah shares declined 1.05%. Despite the recent rally following Motilal Oswal’s bullish coverage, the stock remains marginally negative on a one-month basis.

Key financial estimates and valuations

Motilal Oswal expects PhysicsWallah’s revenue to increase from Rs 3,899.4 crore in FY26 to Rs 4,944.4 crore in FY27 and Rs 6,138.9 crore in FY28. This represents projected growth of 26.8% in FY27 and 24.2% in FY28.
EBITDA is estimated to rise from Rs 548.6 crore in FY26 to Rs 993.2 crore in FY27 and Rs 1,400.1 crore in FY28. The EBITDA margin is projected to expand from 14.1% to 20.1% and 22.8%, respectively.

The brokerage expects the company to swing from an adjusted loss of Rs 24.8 crore in FY26 to a profit of Rs 313.4 crore in FY27. Adjusted profit is projected to rise further to Rs 575.5 crore in FY28. Unique transacting users are expected to increase from 4.9 million in FY26 to 7 million by FY28.
At the brokerage’s reference price, PhysicsWallah is valued at 110 times estimated FY27 earnings and 59.9 times FY28 earnings. Its EV-to-EBITDA multiple is projected to decline from 34.2 times in FY27 to 23.8 times in FY28.Using a sum-of-the-parts valuation, Motilal Oswal valued the online business at Rs 172 per share, based on 50 times FY28 EBITDA. It assigned Rs 4 per share to the offline business, Rs 1 to other businesses and Rs 20 to cash, arriving at a rounded target price of Rs 200.

Differentiated CAC moat

PhysicsWallah’s free-to-paid funnel is anchored by more than 100 million YouTube subscribers and over 83 million app downloads. This allows students to discover the platform organically, keeping marketing expenditure at about 4% of revenue, below several peers, and lowering customer-acquisition costs, the brokerage firm said.

Online dominance

The online business had 4.9 million paying users in FY26, with average revenue per user of Rs 4,104. Motilal Oswal expects online revenue to grow at about 28% annually between FY26 and FY30, supported by user additions, entry into new categories, and AI-led monetisation.

Offline scalability

PhysicsWallah expanded its offline network from 28 centres in FY23 to 353 in FY26. Around 80% of offline admissions originate from its online learner base, reducing the need to build demand from scratch in each market. Motilal Oswal expects offline revenue to grow at about 20% annually through FY30 and its pre-Ind AS EBITDA margin to reach 3% by FY28 as centres mature.

The brokerage firm also noted intense competition from established coaching institutes and digital-first platforms, weak utilisation or execution at offline centres, and an elevated employee attrition rate of around 28%. Slower adaptation to AI-led learning, higher student dropouts, faculty availability, poor academic outcomes, reputational issues, and adverse changes in regulations governing coaching, advertising or data privacy could also affect growth and profitability.

Disclosure: This article has been written by [Somanjali Das], who is not a SEBI-registered Research Analyst or an investment advisor. [Somanjali Das] does not hold any financial interest in [PhysicsWallah] as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment.

The Research Analyst is [Abhishek Pathak]. The RA is registered with SEBI under registration number [INH000000412]. The RA does not hold any financial interest in the [Physicswallah].