Synopsis : PhysicsWallah shares jumped nearly 10% after Q1 FY27 results showed narrower losses and stronger online growth. JM Financial upgraded the stock to Buy with a Rs 140 target, while PM Modi’s free online coaching announcement has added another potential growth angle for the EdTech company.
PhysicsWallah shares jumped nearly 10% in intraday trading after the online education platform reported a significant improvement in its first-quarter performance. The stock climbed 9.6% to Rs 128.37 during the session.
The company’s Q1 FY27 results showed narrower losses, stronger revenue growth and a return to positive EBITDA. At the same time, PhysicsWallah has attracted additional attention following Prime Minister Narendra Modi’s Independence Day announcement on free online coaching for competitive examinations.
The combination of improving financial performance and growing policy focus on affordable digital education has brought the recently listed EdTech company back into focus.
PhysicsWallah Q1 results: Losses narrow, EBITDA turns positive
PhysicsWallah reported a consolidated net loss of Rs 88 crore in Q1 FY27, compared with a loss of Rs 120 crore in the year-ago quarter.
Revenue from operations increased 24% year-on-year to Rs 1,054 crore from Rs 851 crore in Q1 FY26.
More importantly, the company returned to positive EBITDA. PhysicsWallah reported EBITDA of Rs 52 crore in the quarter, compared with negative EBITDA in the year-ago period.
Its EBITDA margin improved sharply to 4.9% from -2.5% a year earlier, representing an improvement of 743 basis points.
The improvement suggests that the company is beginning to gain operating leverage as its online business expands. However, the quarterly performance was not completely uniform across its different segments.
The offline business was affected by the timing of the NEET re-examination, which pushed some revenue recognition into later periods.
Why JM Financial upgraded PhysicsWallah to Buy
The improving quarterly numbers have also prompted a more positive view from JM Financial.
The brokerage upgraded PhysicsWallah to ‘Buy’ while retaining its June 2027 price target of Rs 140. Based on the stock’s recent levels, the target indicates nearly 20% potential upside.
JM Financial believes the company delivered a decent Q1 despite some revenue being pushed out because of the NEET re-examination.
The online business remained the biggest growth engine. It expanded 33.2% year-on-year, supported by growth across K-12 education, early learning, vernacular content and newer categories.
The offline business grew 14.5% during the quarter. However, JM Financial believes this figure does not fully reflect the underlying momentum because of the timing impact associated with the NEET re-examination.
After adjusting for this disruption, the brokerage estimates that the company’s revenue growth could have been closer to 20-25%.
Can PhysicsWallah sustain its profitability improvement?
The next major question for investors is whether the improvement in profitability can continue.
PhysicsWallah has maintained its FY27 revenue growth guidance of around 30%. The company also expects its pre-Ind AS EBITDA to double during the financial year.
JM Financial has become more optimistic about the earnings trajectory and raised its consolidated pre-Ind AS EBITDA estimates by 7-9% for FY27-29.
The brokerage has also increased its adjusted PAT estimates by 4-12% over the same period.
According to JM Financial, the Q1 performance has strengthened its confidence in PhysicsWallah’s earnings trajectory.
Another development that could improve the company's financial profile is the planned divestment of FinZ, its education-loan business.
The move could help address some earlier concerns around capital allocation and allow the company to focus more closely on its core education operations.
JM Financial believes the underlying business remains intact and that the stock’s correction of more than 20% from its recent highs has improved the risk-reward profile.
PM Modi’s free online coaching plan puts EdTech back in focus
PhysicsWallah is also receiving attention for a reason that goes beyond its quarterly financial results.
During his Independence Day speech, Prime Minister Narendra Modi announced plans to provide free online coaching for competitive examinations.
Modi highlighted the financial burden that coaching classes can place on middle-class families and said the government would use digital infrastructure to expand access to affordable education.
He pointed to India’s digital public infrastructure and the availability of highly skilled teachers and educators as key elements behind the initiative.
The announcement does not directly change PhysicsWallah’s financial forecasts. However, it brings online education and affordable competitive-exam preparation back into the spotlight.
That is particularly relevant for PhysicsWallah because online education remains its fastest-growing business.
The company has built its brand around relatively affordable preparation for examinations such as JEE and NEET, while also expanding into K-12 education, early learning and other categories.
What investors should watch next
For PhysicsWallah, the immediate focus will be on whether the strong growth in its online business can continue while profitability improves.
Investors will also be watching for a normalisation in the offline segment after the disruption caused by the NEET re-examination.
The company’s ability to deliver around 30% revenue growth in FY27 while simultaneously improving margins will be critical to supporting its valuation.
The divestment of FinZ and the company's capital-allocation decisions will also remain important.
Meanwhile, the government's push towards free online coaching could increase the broader focus on digital education, although it could also introduce greater competition if government-backed platforms begin offering similar services.
For now, the key investment question is whether PhysicsWallah can turn its strong online growth into sustained profitability.
The Q1 results provide some evidence that this transition is beginning, but investors will need to see several more quarters of improving earnings before the turnaround can be considered firmly established.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.
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