PhysicsWallah Could Deliver 7-fold Profit Jump By FY28, Says HSBC

Brokerage firm HSBC has initiated coverage on PhysicsWallah with a “Buy” rating and a target price of ₹135 per share, implying an upside of about 28%.

The brokerage said the edtech is entering a strong growth phase, with revenue expected to rise at around 30% annually over FY26–FY28. It also projects adjusted EBITDA to increase nearly sevenfold to ₹9.6 billion by FY28, driven by expansion across both online and offline segments.

PhysicsWallah, which started as a YouTube channel in 2016, is now one of India’s leading education technology companies offering both online and offline courses. The company went public in November 2025 in an issue comprising a fresh share sale of ₹3,100 crore and an offer for sale component of ₹380 crore, through which co-founders Alakh Pandey and Prateek Maheshwari each offloaded shares worth ₹190 crore.

PhysicsWallah Q4 Preview

HSBC expects a sharp improvement in profitability, with margins rising from about 3.6% in FY26 to nearly 15% by FY28. It said PhysicsWallah’s margin growth is largely dependent on scaling up both its online and offline businesses.

The brokerage noted that the online business already operates on a profitable, fixed-cost model, where incremental subscriptions directly boost margins.

HSBC also highlighted that average revenue per user is likely to rise steadily due to inflation and a stronger brand position, which may reduce reliance on discounts and scholarships.

Online Gains, Offline Push

HSBC said PhysicsWallah’s growth will come from both its online and offline businesses. While the online segment is already profitable due to its fixed-cost model, profitability is expected to improve further as more students subscribe and average revenue per user rises steadily.

In offline operations, the company is expanding its “Vidyapeeth” centres, which require higher fixed costs but are expected to become more efficient over time. As newer centres mature and seat utilisation improves, profitability is likely to rise. HSBC expects the offline business to break even in FY27 and turn profitable by FY28.

The report also highlighted that brand strength and lower reliance on discounts will support steady growth in subscription revenue.

Valuation and Risks

HSBC values PhysicsWallah at a target EV/EBITDA multiple of 35x on FY28 estimates. Including cash reserves of about ₹50 billion, it assigns an equity value of ₹386 billion, or ₹135 per share, implying an upside of nearly 28%.

The brokerage said growth is likely to continue beyond FY28, though at a more moderate pace. However, it also flagged risks such as regulatory changes, teacher attrition, and rising competition from offline coaching centres.