Physics Wallah IPO Faces Investor Hesitation! Subscription Dips Amidst Falling Grey Market Premium - What's Next?

Physics Wallah IPO Faces Investor Scrutiny Amidst Slow Subscription and Falling Grey Market Premium The much-anticipated Initial Public Offering (IPO) of edtech firm Physics Wallah, aiming to raise Rs 3,480 crore, has experienced a subdued response from investors on its second day of bidding (November 12). The issue had garnered only 9% subscription by mid-day, indicating cautious investor sentiment. Retail investors showed some interest, subscribing 44% of their quota, while Non-Institutional Investors (NIIs) were at a low 3%. Qualified Institutional Buyers (QIBs) are yet to make significant bids. Adding to the concerns, the Grey Market Premium (GMP) for Physics Wallah shares has declined sharply, currently trading below 1.38% compared to higher figures last week. This suggests a weaker outlook for listing gains. Brokerage Views & Analysis: Leading financial institutions have offered mixed assessments. SBI Securities maintained a 'Neutral' stance, acknowledging Physics Wallah as a top edtech player but pointing out a widening net loss from Rs 81 crore in FY23 to Rs 216 crore in FY25, attributed to depreciation and impairment losses. They consider the valuation "fairly valued" at an EV/Sales multiple of 9.7x. Angel One also issued a 'Neutral' rating, advising investors to await clearer earnings visibility. They highlighted that, as a loss-making entity, direct P/E comparisons are difficult, and profitability is pressured by scaling costs and competition. Key risks identified include execution challenges from offline expansion and continued losses. InCred Equities, however, recommended 'Subscription,' anticipating future profitability and noting the company's strong moat and business expansion potential, despite acknowledging a "stretched" valuation. Impact: This news could temper investor enthusiasm for upcoming EdTech IPOs and may lead to a subdued listing for Physics Wallah, potentially affecting investor sentiment in the Indian stock market's growth sectors. Rating: 6/10 Difficult Terms Explained: * IPO (Initial Public Offering): The process where a private company sells its shares to the public for the first time, becoming a publicly listed entity. * Subscription: The extent to which an IPO issue is oversubscribed or undersubscribed based on investor demand. * Grey Market Premium (GMP): An unofficial indicator of demand for an IPO, reflecting the price at which unlisted shares are trading before their official listing. * Offer for Sale (OFS): A component of an IPO where existing shareholders sell their stake, unlike a fresh issue which raises capital for the company. * Retail Investors: Individual investors applying for shares worth up to Rs 2 lakh. * Non Institutional Investors (NII): High-net-worth individuals and corporate bodies applying for shares exceeding Rs 2 lakh. * Qualified Institutional Buyers (QIB): Large institutional investors like mutual funds, foreign institutions, and banks. * Net Loss: Occurs when a company's total expenses exceed its total revenues over a specific period. * Depreciation Expenses: An accounting charge that reduces the value of an asset over its useful life. * Impairment Losses: A charge taken when an asset's carrying value is deemed unrecoverable or exceeds its market value. * EV/Sales Multiple: A valuation metric comparing a company's Enterprise Value to its total revenue. * P/E Basis: Price-to-Earnings ratio, a common valuation metric comparing share price to earnings per share. * CAGR (Compound Annual Growth Rate): The mean annual growth rate of an investment over a specified period longer than one year. * Moat: A sustainable competitive advantage that protects a company's long-term profits and market share.