PhysicsWallah IPO Struggles: Unicorn Sees Lukewarm Investor Response on Day 2!

PhysicsWallah, the edtech unicorn, is facing a subdued demand for its Initial Public Offering (IPO). On the second day of bidding, the issue was subscribed to only 10%, indicating a cautious market reception. Out of the total shares available, only 1.86 crore bids were received against 18.62 crore shares. The employee category saw the highest interest with 1.45X subscription, and retail individual investors (RIIs) subscribed 45% of their portion. However, the Non-Institutional Investors (NII) segment was subscribed merely 4%, and Qualified Institutional Buyers (QIBs) showed minimal participation.

The IPO offers shares within a price band of INR 103 to INR 109. The company plans to use proceeds from the INR 3,100 crore fresh issue, along with an INR 380 crore Offer for Sale (OFS), for expanding its offline coaching centres and for advertising. At the upper end of the price band, PhysicsWallah is valued at approximately INR 31,169 crore ($3.5 billion), a notable increase from its previous funding rounds.

Financially, PhysicsWallah reported a net loss of INR 125.5 crore in Q1 FY26, a 78% year-on-year increase, though its operating revenue grew by 33% to INR 847 crore. For the full fiscal year FY25, the company had reduced its net loss by 78% to INR 243.3 crore from INR 1131.1 crore in FY24, with operating revenue increasing by 49%.

Impact: The lack of strong investor interest could pressure the stock's performance upon listing and potentially impact the company's future capital-raising activities. It may also signal evolving investor sentiment towards the Edtech sector. Rating: 6/10

Difficult Terms Explained: - IPO (Initial Public Offering): The process by which a private company becomes public by selling its shares to investors for the first time. - Subscription: The process of applying for shares during an IPO, indicating investor demand. - RII (Retail Individual Investor): Individual investors who invest in IPOs up to a certain limit (typically INR 2 Lakh in India). - NII (Non-Institutional Investor): High-net-worth individuals or entities that bid for IPO shares above the RII limit. - QIB (Qualified Institutional Buyer): Large financial institutions like mutual funds, insurance companies, and foreign portfolio investors. - OFS (Offer For Sale): A type of offer where existing shareholders sell their stake in the company to the public. - FY26: Refers to the Financial Year 2025-2026. - YoY (Year-on-Year): A comparison of financial data from the current period to the same period in the previous year.