JM Financial Initiates Coverage on PhysicsWallah, Estimates Revenue to Grow at 28% CAGR

JM Financial Institutional Securities has initiated coverage on PhysicsWallah with a Buy rating and a target price of ₹110, implying an upside of about 23.2% from the previous close of ₹89.30.

The brokerage cited the company’s fast-growing hybrid model, disciplined spending, and rapidly expanding paying user base as key drivers of strong multi-year earnings growth.

JM Financial Estimates for PW

JM Financial expects PhysicsWallah’s consolidated revenue to grow at a 28% CAGR between FY25 and FY28, supported by sustained traction on its online platform and the scaling up of its offline centres.

The brokerage also projects EBITDA margin expansion from 3.2% in FY25 to around 13% by FY28, driven by operating leverage as fixed costs are absorbed and higher-margin online revenues increase. PhysicsWallah reported approximately 4.37 million paying users in the first nine months of FY26, which JM Financial views as evidence of durable demand and a strong conversion funnel.

The report highlights several structural advantages, including low marketing intensity, about 10% of revenue, which supports healthy cash flows and strong enrolment economics. It also points to a high-conversion online platform that feeds into offline expansion and a scalable model that has gained traction in test categories such as civil services and commerce.

JM Financial values the digital business at a significantly higher multiple than the offline operations, assigning a 30× multiple to the online segment versus a materially lower multiple for the offline business. This underscores the brokerage’s view that the online segment is the primary value driver.

Brokerage Listed Challenges

The brokerage cautions about execution risks related to rapid offline expansion.

Expanding physical centres entails higher operating costs, increased operational complexity, and additional capital requirements, which could temporarily pressure margins. Competitive intensity in key exam segments and the company’s ability to maintain high conversion rates while expanding across tier-1 and tier-2 cities will be critical factors to monitor.

Overall, JM Financial’s initiation positions PhysicsWallah as a high-growth, margin-expanding player in the listed edtech space, with a clear thesis that robust online economics can support aggressive offline scaling. The ₹110 target price and Buy rating reflect this conviction, while acknowledging execution risks associated with offline expansion.