PhysicsWallah's Acquisition Strategy More Disciplined Than Peers, Says DAM Capital

Brokerage firm DAM Capital Advisors has initiated coverage on edtech platform PhysicsWallah (PW) with a BUY rating and a target price of ₹140 per share, implying a 33% upside from the current market price of ₹105, according to an equity research report dated 9 June.

The brokerage firm valued the company using a sum-of-the-parts methodology, the online business valued at a 35x FY28E adjusted EBITDA, the offline business at 10x, and factoring in ₹52.2 billion in projected cash.

DAM described PW as India's largest full-stack education platform, operating across 16 categories with meaningful online scale, over 300 offline centres, and a 142-million-subscriber acquisition engine.

The report also highlighted that PW is the only major Indian edtech player to approach profitability, which it attributes to the company's industry-lowest customer acquisition cost and refusal to rely on high-cost star faculty.

Company's Performance and Strategy

The report highlighted that PW has effectively solved two problems that drowned edtech, acquisition costs and star-teacher pay. Advertisement and publicity expenses ran at nearly 9% of revenue in FY26, well below industry rates, which is attributed to the YouTube-to-paid conversion funnel.

The report contrasts this with Byju's, which had spent approximately 65% of its revenue on advertisements.

The offline business remains in active investment mode, with the report noting that approximately 52% of Vidyapeeth centres are already profitable as of FY26.

However, the report flagged that the blended offline EBITDA margin currently stands at approximately negative 10%, with VIdyapeeth itself running at only a low-to-mid single-digit negative margin.

The bulk of the losses, it highlighted, sits in the other verticals that make up the remaining 30% of offline revenue.

The report also highlighted PW's acquisition record as a point of differentiation from peers. Out of the approximate $625 million the firm raise in its entire lifetime, only around 13%, around $84 million, went to nine acquisitions, against approximately 41-53% for Byju's.

DAM capital also flagged the weak JEE and NEET rank outcomes as the primary risks to the offline demand, alongside slower-than-expected new category scale-up online, competition-led customer acquisition cost escalation, and execution risks in the K-12 school segment.

The brokerage described it as a longer gestation and higher capex model relative to PW's asset-light online core.