Goldman Sachs Initiates Coverage on PhysicsWallah: Target Price Set at ₹135
Goldman Sachs has officially initiated coverage on the edtech platform PhysicsWallah, assigning it a ‘Neutral’ rating with a target price of ₹135. This evaluation underscores the company’s strong execution capabilities within a substantial addressable market.
Key Highlights of Goldman Sachs’ Report on PhysicsWallah
– Strong Market Position: Recognized as a leading player in the Indian education technology sector, PhysicsWallah showcases a solid track record and promising long-term growth prospects.
– Impressive Revenue Projections:
– Expected to achieve a 24% compound annual growth rate (CAGR) in revenue from FY25 to FY30.
– Anticipated to surpass an 80% CAGR in EBITDA during the same timeframe.
– Driving Factors for Growth:
– Robust organic traffic driving user acquisition.
– Favorable competitive landscape within the Indian edtech sector.
– A pricing strategy designed to enhance market penetration into new educational categories.
However, Goldman Sachs pointed out challenges regarding the firm’s offline expansion efforts, labeling them as “still nascent.” The brokerage further noted that achieving steady-state margins in the offline segment is uncertain due to the highly commoditized and competitive nature of the physical education market compared to its online counterpart.
Valuation Metrics
Currently, PhysicsWallah is trading at 100x FY27E P/E and 52x FY28E P/E, positioning it at the mid-to-high end of valuation within India’s internet peer group, according to Goldman Sachs.
Strategic Acquisitions for Future Growth
In a separate announcement, PhysicsWallah’s parent entity, Penpencil Edu Services, disclosed a strategic acquisition to bolster its expansion efforts. The company has entered into an agreement to acquire a 1.76-acre land parcel for ₹69.49 crore. Although specific development plans were not disclosed, this move indicates the company’s intent to support future growth.
Conclusion
Goldman Sachs’ coverage initiation with a target price of ₹135 reflects PhysicsWallah’s promising trajectory in the edtech sector, driven by solid revenue and EBITDA growth expectations. As the company navigates its offline expansion while capitalizing on its strong online presence, it remains an intriguing prospect for investors in the education technology landscape.