Physics Wallah IPO Sees Slow Start: Will India's Edtech Giant Rally on Day 3?

Physics Wallah, a leading edtech firm, has launched its Initial Public Offering (IPO) aiming to raise Rs 3,480 crore. The subscription, which opened earlier this week, showed a subdued response on the second day, with only 10% of the total issue subscribed by 11:30 am on Wednesday. Data from the National Stock Exchange (NSE) indicates bids for 1,83,06,625 shares against an issue size of 18,62,04,143 shares.

Subscription levels varied significantly across investor categories. Retail Individual Investors (RIIs) showed moderate interest, with their portion subscribed at 46%. Non-Institutional Investors (NIIs) had a lower subscription rate of 4%. Notably, Qualified Institutional Buyers (QIBs) recorded no participation for the second consecutive day.

Prior to the public issue, Physics Wallah successfully raised Rs 1,563 crore from anchor investors. The IPO comprises a fresh issue of shares worth Rs 3,100 crore and an Offer for Sale (OFS) of up to Rs 380 crore, where co-founders Alakh Pandey and Prateek Boob will each sell shares valued at Rs 190 crore. The company has set a price band of Rs 103-109 per share, potentially valuing it at over Rs 31,500 crore at the upper end.

The funds raised are intended for expansion and growth initiatives. PhysicsWallah offers test preparation and upskilling programs through various online and offline channels. Despite initial slow subscription, the company reported reduced losses and increased revenue in the fiscal year ended March 2025. Shares are slated to list on the stock exchanges on November 18.

Impact: This IPO's performance is crucial for the Indian edtech sector's perception in the stock market. A successful listing could boost investor confidence in similar companies, while a weak response might cast a shadow. The initial muted subscription rate raises questions about market appetite for edtech IPOs at current valuations, potentially impacting future fundraising for startups in this space. Rating: 7/10

Difficult Terms Explained: Initial Public Offering (IPO): The first time a private company offers its shares to the public on a stock exchange, allowing it to raise capital. Offer for Sale (OFS): A process where existing shareholders of a company sell their shares to new investors, allowing them to exit or partially cash out without the company issuing new shares. Retail Individual Investors (RII): Individual investors who apply for shares worth less than Rs 2 lakh in an IPO. Non-Institutional Investors (NII): Investors who apply for shares above Rs 2 lakh but are not Qualified Institutional Buyers, including high net-worth individuals and corporate bodies. Qualified Institutional Buyers (QIB): Large institutional investors like mutual funds, foreign institutional investors, pension funds, and insurance companies that invest significant amounts. Draft Red Herring Prospectus (DRHP): A preliminary registration document filed with the securities regulator before an IPO, containing detailed information about the company and the proposed offering. Red Herring Prospectus (RHP): An updated prospectus filed after the DRHP, containing more finalized details, including the IPO price band and issue size.