PhysicsWallah shares rally 8% after Q1 loss narrows, revenue rises 24% YoY. Should you buy?

Synopsis

PhysicsWallah shares gained sharply after the edtech company reported improved Q1FY27 performance, with revenue rising and losses narrowing year-on-year. Brokerage JM Financial viewed the quarter positively and maintained a bullish stance, citing strong online growth, improving profitability and growth prospects.

PhysicsWallah shares jumped 7.73% to Rs 127 in Monday’s trading session after the edtech company reported a sharp improvement in its financial performance for the first quarter of FY27. Analysts viewed the quarter as decent despite the disruption caused by the NEET exam schedule and upgraded the stock to a BUY rating.

PhysicsWallah’s consolidated net loss narrowed to Rs 88.3 crore in Q1FY27, compared with a loss of Rs 127 crore in the same period last year. Revenue from operations rose 24% year-on-year to Rs 1,054 crore from Rs 847 crore, driven primarily by strong growth in its online business.

The company also reported positive post-interest EBITDA of Rs 52 crore during the quarter, marking a significant improvement from the year-ago period. Adjusted EBITDA jumped more than five-fold year-on-year to Rs 135 crore, while the adjusted EBITDA margin expanded to 12.9% from 3.1% a year ago.

On a pre-Ind AS basis, EBITDA loss narrowed sharply to Rs 44 crore from Rs 89 crore in Q1 FY26, with the margin improving to -4.2% from -10.5%.

PhysicsWallah said its online business continued to be the primary growth engine, supported by traction across K-12, Early Learning, vernacular content and newer examination categories. Learner engagement also remained strong. Daily active users climbed 26% YoY to more than 4.03 million, while cumulative app downloads crossed 97 million. Total enrolments stood at 2.49 million, up 2.4% from the year-ago period.

The company operated 366 offline centres and offered courses across more than 16 online examination categories. Its faculty strength stood at 7,268, while total employee headcount was 19,567.

Alakh Pandey, Founder and CEO of PhysicsWallah, said the quarter marked an important milestone in the company’s journey towards sustainable profitability. He highlighted continued expansion across online, offline, K-12 and newer categories, while emphasising disciplined capital allocation.

Brokerage turns bullish on the stock

JM Financial Institutional Securities described the Q1 performance as “decent”, noting that consolidated revenue grew 24% YoY despite the NEET-related revenue shift. It highlighted the 33.2% YoY growth in the online business and improving monetisation and profitability.

The brokerage also said the offline business’s 14.5% growth was affected by the NEET timing shift and estimated that, excluding this impact, growth could have been in the 20–25% range.

With management reiterating its FY27 revenue growth guidance of around 30% and its target of doubling pre-Ind AS EBITDA, JM Financial upgraded PhysicsWallah to Buy, maintaining its June 2027 target price of Rs 140.

The brokerage also pointed to the company’s decision to divest FinZ as a potential positive for capital allocation. With the stock having corrected more than 20% from its recent highs, JM Financial said the risk-reward profile had become more favourable.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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