Buy call, but red screen: Why Physicswallah stock slipped despite JM Financial’s bullish bet

Physicswallah Shares Today: Physicswallah Ltd came under selling pressure on Friday even as JM Financial Institutional Securities initiated coverage on the edtech firm with a Buy rating, citing strong growth prospects led by its online business.

At around 2:10 pm IST on February 27, Physicswallah shares were trading at Rs 86.65 on the NSE, down Rs 2.65 or 2.97 per cent. The stock retreated from early gains amid broader market weakness and some profit-taking, dealers said.

Brokerage sees strong upside led by digital engine

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JM Financial has assigned a target price of Rs 110, implying an upside potential of 23.2 per cent from the earlier close of Rs 89.30. The brokerage expects robust revenue growth, driven largely by the company’s high-margin online segment.

Physicswallah has now secured a significant position in online education, helped by a paying user base of 4.37 million during the initial nine months of FY26, noted the JM Financial. The brokerage also noted that the company is supported from strong organic reach, helping significantly to maintain industry-leading efficiency with relatively lower marketing spends.

Online business helps

JM Financial highlighted that Physicswallah recorded superior enrolment volumes and healthy cash flows in FY25, outperforming peers. This has allowed the online business to generate stable margins, which JM Financial believes are critical to funding the company’s broader expansion plans.

“A formidable digital footprint serves as a high-conversion funnel for the company’s aggressive offline expansion, allowing it to enter competitive markets with built-in brand equity,” JM Financial said in its report.

Offline push gathers traction, but challenges remain

Physicswallah’s asset-light and agile operating model allows it to expand into new exam categories and geographies with relative ease, the brokerage said. JM Financial pointed to strong traction in civil services and commerce offerings, supported by a scalable playbook.

The brokerage estimates a 28 per cent revenue CAGR between FY25 and FY28 and expects consolidated adjusted Ebitda margins to expand sharply to 13 per cent by FY28, from 3.2 per cent in FY25, driven by operating leverage across both online and offline channels.

Valuation tilts in favour of online segment

JM Financial has valued the digital business at 30 times FY28 price-to-earnings, compared with 25 times for the offline business, underlining its view that the online segment will remain the primary growth engine for the company.

Key risks to watch out for

Even after all these positives, JM Financial has highlighted many risks, including potential market saturation in major categories such as NEET, JEE and Foundation courses. Execution challenges in offline expansion, geographic concentration, and regulatory uncertainties could also weigh on growth prospects, it said.

For now, analysts said near-term stock performance may remain volatile as investors balance long-term growth visibility against execution risks and broader market sentiment.