Physicswallah is ‘class’ apart, says DAM Capital after initiating with Buy rating. 3 reasons why
With a target price of Rs 140 per share, analysts predict an upside of 33% from current market levels. What started as a free physics-focused YouTube channel in 2014 has evolved into India’s largest full-stack education platform, expanding across 16 categories with significant scale in both online and offline learning.
The company now operates more than 300 centres and has built a subscriber acquisition engine of 142 million users, a scale unmatched by peers, Dam analysts said in a note.
Here are 3 reasons behind the bullish call
1. Lowest CAC According to the brokerage, Physicswallah enjoys the lowest customer acquisition cost (CAC) among Indian online ed-tech companies, supported by a content-first strategy that was built long before monetisation began.
The brokerage noted that the company’s advertising spend is estimated at just 9.6% of revenue in FY25 and 9.1% in FY26, significantly lower than peers despite serving a much larger base of paying students. DAM Capital highlighted that the platform delivered a 42% CAGR in unique enrolments between FY23 and FY26 while maintaining minimal marketing expenditure. In comparison, it noted that Byju’s advertising spend had reached about 65% of revenue at its peak.
The brokerage believes this customer acquisition cost advantage represents Physicswallah’s most durable competitive strength, enabling low-cost expansion into new categories such as Civil Services, Foundation and State Boards, while supporting stronger unit economics than listed online ed-tech peers.
2. Online cash engine Physicswallah’s online business remains the primary growth and profitability engine of the platform, contributing about 50% of consolidated revenue in FY26. The brokerage estimates that the company holds around a 20% share in the flagship JEE and NEET segment, making it the only Indian online ed-tech player to combine scale with profitability, with FY26 earnings expected to be nearly PAT-positive excluding one-off items.
Looking ahead, DAM Capital expects growth to be driven less by the relatively mature JEE and NEET categories and more by underpenetrated segments such as Foundation, Civil Services, Chartered Accountancy, State Boards and CUET preparation.
The brokerage identified the company’s centralised content and faculty base of around 2,500 employees as a key margin driver. Since this cost base is largely fixed and serves both online and offline channels, it can be spread across a much larger revenue and student base. The brokerage has factored in a 27% revenue CAGR over FY26-FY28 and expects pre-Ind AS online EBITDA margins to expand from about 26% in FY26 to nearly 31% by FY28.
3. Building offline muscle
The business remains in an investment phase, with growth primarily being driven by the addition of new Vidyapeeth (VP) centres. The brokerage noted that the segment continues to absorb upfront capital expenditure, faculty costs and marketing expenses ahead of utilisation, resulting in pressure on profitability during the expansion phase.
The Vidyapeeth vertical accounts for around 70% of the company’s offline revenue base and currently operates at a low-to-mid single-digit negative EBITDA margin. However, DAM Capital highlighted that 52% of the total Vidyapeeth centres are already profitable, with losses largely concentrated in centres added over the past 12 months that are still in the ramp-up stage.
The brokerage believes this centre mix provides confidence that profitability will improve as newer centres mature and utilisation levels rise. It noted that while the Vidyapeeth business remains the largest component of the offline portfolio, the remaining 30% of offline revenue is currently weighing on overall segment profitability, resulting in margins of about negative 10% for the offline business as a whole.
The brokerage has projected a 21% revenue CAGR for the offline business between FY26 and FY28. However, it expects adjusted EBITDA to turn positive only in FY28, reflecting the company’s continued reinvestment into network expansion and growth initiatives.
Physicswallah shares have risen 16% in the last 5 days but still trade 20% lower in 2026.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
